AUD/USD: 0.6985EUR/USD: 1.0860The selloff of risk assets has been turned around through the session, with oil and US equities recovering to post a more positive close following a rally yesterday in Chinese Stock Markets (+2%). The commodity bloc currencies have partially reversed earlier losses, while the US$ has managed to rally against the Yen. Gold has been the main loser today as defensive assets were less in demand. Elsewhere Sterling had a volatile period in Europe but eventually closed unchanged after the BOE left rates on hold, while the Euro made some early gains in Europe, only to give them up later in the day, to remain unchanged on the day. The coming session could be busy with a fair bit of action to be seen from the US. The Retail Sales will be the key feature, but there is plenty else aside, including the New York State Empire Mfg Index, Rts/Michigan Consumer Sentiment Index, PPI, Capacity Utilisation, Industrial Production, Business Inventories and a speech from the Fed’s Dudley.
AUDUSD made a new trend low at 0.6909 on Thursday, as risk sentiment soured although a reversal higher has since occurred, helped along by a solid close in Chinese stocks yesterday (CSI 300 +2.08%) which has had a flow on effect in a more positive performance in both oil and US stocks.
Yesterday's jobs figures were an overall positive result for the Aud and it would seem unlikely that the RBA have to consider a rate cut any time soon, instead allowing the lower dollar to do the work for them in re-balancing the economy.
AUDUSD is finishing the US session at the day’s highs of 0.6990, with the short term charts looking positive for the chance of another run to 0.7000 and above.
There will be some minor data today from both Australia (Home Loans) and also from China (New Loans) although these are unlikely to shake the market too much as focus will ultimately remain on the Chinese stocks and the Yuan fixing level.
Technically, little has changed, and on the topside 0.7000 will again be the initial resistance ahead of the minor descending trend resistance / 200 HMA, both at 0.7035 and the high of the week, seen following the China Trade Balance, at 0.7048. A break of this would open the way towards 0.7065 (38.2% of 0.7327/0.6909) but seems unlikely today.
To the downside, 0.6940 will provide minor support ahead of 0.6900/10, which should be strong. Below there, as I said before, there is little to underpin the Aud under 0.6900 (unlikely today) and the next meaningful support would not be seen until 0.6769 (March 2009 low).
Economic data highlights will include:
Home Loans, Investment Lending for Homes, China New Loans.
Jim LanglandsFX Charts
