AUD/USD: 0.7070EUR/USD: 1.1140The US Unemployment figures offered a confused outlook, leaving traders scratching their heads as to future interest rate prospects. While the headline unemployment was highly encouraging in falling to 4 the lowest reading since February 2008, at 4.9%, the NFP grew by just 151K, well under expectations of 190K. A sharp rise in hourly wages only added to the confusion by hinting that the labor market recovery remains on track. All rather bewildering! This leaves the Fed caught between wanting to hike rates in March and not really being able to do so. They will continue to monitor conditions between now and the next meeting, due on March 16, beginning with this week's US focus; the Retail Sales on Friday. Before then Janet Yellen will be testifying to the House Financial Services Committee, which will most likely be the main event of the whole week as the market search for hints as to the Fed’s forward thinking. Elsewhere, China, Singapore, HK are all out for the whole week, celebrating the Lunar NY, so Asia is likely to be pretty thin. Monday will be largely spent in further disseminating the US Jobs figures and there is little else out, with the EU Sentix Investor Confidence Survey probably being the highlight. Elsewhere there are bits and pieces of secondary data due during the week, along with carious central bank speakers. It could be another choppy week but the real action should be on Wednesday (Yellen) and on Friday (US Retail Sales).
AUDUSD had a tough end to the week and suffered heavily following Friday’s jobs figures. After reaching a high of 0.7220 immediately after the poor NFP had been released, generating general US$ weakness, it quickly reversed when traders saw the AHE figure, and it then proceeded to head lower in to the weekend, placed under additional pressure by the steep selloff in US stocks.
This week sees the China New Year holidays, and with NZ also out today, Monday is going to be a rather thin start, but there will be some Australian figures to watch out for later in the week, including the New Home Sales and NAB Business Conditions/Confidence (Tues), the WBC Consumer Confidence (Wed) and the Consumer Inflation Expectation (Thur). Also of note; the RBA Governor, Glenn Stevens will be speaking before the House representatives standing committee on economics on Friday morning and may create some waves, so will be worth watching. Otherwise events will be driven mostly by offshore flows where the focus will be on Janet Yellen’s testimony on Wednesday.
AUDUSD is now pretty much back in the middle of the range that has covered it since last August and it would seem that we are in for more of the same choppy conditions ahead, particularly if both the RBA and the US Fed remain on hold, as seems increasingly likely, although given the nervous state of the markets further risk aversion would seem likely to place the pressure to the downside.
If so, below Friday’s low of 0.7060 would test the nearby rising trend support at 0.7050, a break of which would then head towards the 2 Feb low at 0.7033 and on towards 0.7000. Under here would then open the way towards a deeper decline towards 0.6985 (61.8% of 0.6826/0.7240), to 0.6925 (76.4%) and then to 0.6900 and lower, towards the trend low at 0.6826.
Sellers will be seen at 0.7090 (200 HMA) and then again at 0.7120 (100 HMA). Above here seems unlikely today although if wrong look for a run towards 0.7150 and potentially back to 0.7200.
Selling into strength seems to be the plan.
Economic data highlights will include:
M: China NY Holiday, ANZ Job Ads, China FX Reserves
T: China NY Holiday, New Home Sales, NAB Business Conditions/Confidence
W: China NY Holiday, WBC Consumer Confidence, China Leading Economic Index
T: China NY Holiday, Consumer Inflation Expectation,
F:.
Jim LanglandsFX Charts
