AUD/USD: 0.7190EUR/USD: 1.0595Despite the thin holiday conditions, the dollar continued its firm trend on Friday, hitting an eight-month high against the Swiss Franc as speculation grew that the SNB would follow the ECB in cutting deposit rates after the ECB meeting due on Thursday. Commodities came under pressure on the back of the US$ strength, with Gold being of particular note head to a 6 year low. WTI was down 3%. Keep an eye on Chinese stocks, which fell 5.5% on Friday. A similar decline today would have equity traders looking rather nervous. The coming week will be pivotal for markets as we head towards Christmas, with the ECB Meeting on Thursday to be closely followed by Janet Yellen, who will testify to Congress and which, in turn, comes ahead of the US Jobs data on Friday. There is plenty of other action due as well, the highlights being the global Mfg PMIs, RBA Interest Rate Decision and German Unemployment (Tues), the EU CPI and Bank of Canada Interest Rate Decision (Wed), the ECB/Yellen(Thur), US Jobs/NFP, Australian Retail Sales (Fri).
AUDUSD came under some pressure on Friday in heading back below 0.7200 and not helped by the Chinese stock market, which fell by 5.5%.
The coming week is going to be rather busy, with plenty of domestic data to push the Aud around for the AUD, with the focus being on the RBA Meeting tomorrow - although following Glenn Stevens’ comments earlier in the week we should not be expecting any change in policy and a fairly neutral outcome looks to be a certainty. Elsewhere, there will see a bit of secondary data today (TD Inflation, HIA New Home Sales, Private Sector Credit), the Australian/China Manufacturing PMIs & RBA(Tuesday), another Stevens speech and the GDP (Wed), the Trade Balance (Thursday) and then the Retail Sales on Friday. Plenty of room for movement!
Although there was plenty of opportunity for the Aud to head lower (Poor Capex, lower Commodities/Chinese Stocks) last week, the it has been fairly resilient and currently remains above the Tuesday session low at 0.7185, which it retested on Friday. It would seem that this may be the direction to watch though and we could see a retest of this in the very near future. Below 0.7180 (38.2% of 0.7015/0.7282) would open the way to the 23 Nov low at 0.7158, and a break of 0.7150 would open the way to the Fibo levels which come in at 0.7115 (61.8%) and at 0.7080 (76.4%), although it looks unlikely that we head much below 0.0.7100 today.
The initial resistance is at the 100 HMA at 0.7200, above which could see another run towards 0.7215 (minor) and possibly back towards Friday's 0.7239 high although this seems doubtful. Further out, sellers are now camped at 0.7250, above which could see a return to last week's high at 0.7282, a break of which could see a run towards 0.7295 (76.4% of 0.7381/0.7015) and to 0.7300. Beyond here seems unlikely for a while, although if wrong, the next realistic targets would be seen at 0.7363 (16 Oct high) and then at 0.7381 (12 Oct high).
Economic data highlights will include:
M: TD Inflation, HIA New Home Sales, Private Sector Credit,
T: AIG Manufacturing PMI, China NBS/Caixin Manufacturing PMIs, RBA Interest Rate Decision/Statement
W: RBA’s Stevens Speech, GDP (Q3)
T: Trade Balance, Caixin China Services PMI
F: Retail Sales.
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