AUD/USD: 0.7105EUR/USD: 1.1255Risk assets were the flavour of the day on Friday, with U.S. stocks recording a positive session, reversing a five-day losing streak, as hopes for production cuts by OPEC ignited a huge move higher in oil prices, with WTI jumping around 12% on the day. Currency markets were mixed, as was Friday’s US data, with the dollar ending on a firmer note against the Yen, Euro and Chf, while under some mild pressure against the Aud and Gbp. The US Retail Sales outperformed expectations although the Consumer Confidence figures were underwhelming. The week ahead will look towards the Minutes from the recent ECB and Fed Meetings for guidance but most of the other data is of a secondary nature. Today will be thin due to the US holiday, although Mario Draghi will be speaking and China will return from their week long holiday which could add to the volatility, with the focus there being on today's China Trade Balance.
AUDUSD ended trade on Friday back just above 0.7100 (200 HMA) after a volatile session, gyrating between 0.7063/0.7127, with more of the same looking likely to be be in store over the next day or two given the flat look of the 4 hour and the daily momentum indicators. Today is a US holiday so liquidity will be thin.
China returns from the NY celebrations today, so aside from the swings in the stock market, the focus will be on the economic data, beginning with today’s Trade Balance, ahead of the Foreign Direct Investment (Tue), the Leading Economic Index (Wed) and then the CPI/PPI (Thur). There will be assorted bits and pieces from Australia as well, starting today with the New Motor Vehicle Sales. More importantly, tomorrow sees the RBA Minutes and then Thursday, the Australian Unemployment figures for January.
Back above Friday’s high of 0.7127 could then see a run to the Thursday session high of 0.7152, beyond which would take a look at 0.7177 (76.4% of 0.7241/0.6972) and potentially 0.7200, a break of which would open the way to the trend high at 0.7241 (4 Feb), albeit not today I suspect.
On the downside, support will be seen at 0.7060/65, below which would head towards 0.7040 and 0.7000 (both minor) ahead of the Thursday low at 0.6983 and the Wednesday low at 0.6972 although this seems unlikely to be seen today.
It is going to be another busy week, with the swings in risk sentiment, largely governed by the oil price and stock movements, being likely to play a large part in any directional move. If anything, the daily/weekly momentum indicators look mildly constructive, so a choppy move towards 0.7200 would not surprise, but I don't think the Aud is going to run away in either direction.
Economic data highlights will include:
M: New Motor Vehicle Sales, China Trade Balance, US Holiday.
T: RBA Minutes, China Foreign Direct Investment
W: WBC Leading Economic Index, China CB Leading Economic Index
T: RBA Gov Edey Speech, Unemployment, China CPI, PPI..
Jim LanglandsFX Charts
