AUD/USD: 0.7040EUR/USD: 1.0740The strong US Jobs outcome on Friday brings a December rate hike firmly back into focus and caused the dollar to jump against all the major counterparts. Equities remained underpinned despite the prospect of higher rates and, after an early dip, the S+P and the Dow both closed higher on the day. Not so impressed where the commodities, with Gold leading the way, closing down $15 oz. Today will be largely spent digesting Friday’s US employment figures, although there is little economic data due from either the EU or the US, with the session highlight likely to be the EU Sentix Investor Confidence Survey. The rest of the week will be busy, with a particularly heavy load from China, including the CPI, PPI (Wed) and Retail Sales, Industrial Production (Thur). Other highlights will include the UK Inflation Report Hearing (Wed), German CPI, UK/ Australian Unemployment (Thur), EU Q3 GDP, US Retail Sales and Rts/Michigan Consumer Sentiment Index (Fri).
AUDUSD headed sharply lower following the release of Friday’s jobs numbers - from above 0.7150 to a low of 0.7022, before closing at 0.7040, although with the indicators building downside momentum, further upside price action would appear t be rather limited in the near term.
The coming week will be a busy one for the Aud, with some significant economic data to be seen both domestically (Home Loans, NAB Business Conditions/Confidence (Tues), Unemployment (Thur)) and also from China (CPI, PPI (Tue) and then the Retail Sales, Industrial Production, Urban Investment (Wed)).
It would appear that the Aud will remain under pressure and once below Friday’s low, the next points to watch would be seen at 0.7012 (76.4% of 0.6900/0.7381) and then at 0.7000, where the minor rising trend support now sits, a break of which will allow a return to 0.6936 (29 Sept low) and to 0.6900 (4 Sept low).
If we do see a rally, we could get a short squeeze towards 0.7070 and even to 0.7105 (23.6% of 0.7382/0.7022), although if so this would appear to be a good medium term sell opportunity. Above here looks unlikely, but further offers would arrive at 0.7125 and at 0.7140 (200 HMA).
Given the outside chance of a December RBA rate cut - in combination with the growing likelihood of a Fed rate hike - trading from the short side would seem to be the medium term plan.
Economic data highlights will include:
M: ANZ Job Ads
T: Investment Lending for Homes, Home Loans, NAB Business Conditions/Confidence, China CPI, PPI, New Loans
W: Wage Price Index, China Retail Sales, Industrial Production, Urban Investment
T: Consumer Inflation Expectation, Unemployment.
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