AUD/USD: 0.7125EUR/USD: 1.0930The dollar ended the week on a firm note after Friday’s strong GDP outcome, which renewed expectations of a US rate hike in 2016, and if this week's US Jobs/NFP report is strong, it will put an early hike firmly back in focus, which would see the US$ continue to outperform and put pressure on its counterparts. Equities reversed early gains on the back of this possibility, finishing slightly lower on the session. The coming days will be busy, with plenty coming up although the US Jobs report will be the main focus. The RBA Interest Rate Decision is due tomorrow, along with the global manufacturing PMIs. Later in the week we get the Australian GDP, EU PPI (Wed), The Services/Composite PMIs (Thur) and the Australian Retail Sales, UK Consumer Inflation Expectation and the US Jobs Report (Fri). Today kicks off with the NZ Building Permits, Australian New Home Sales, TD Inflation, the Japanese Industrial Production and Retail Sales and then from Europe, the important CPI, for Feb.
AUDUSD reached 0.7256 on Friday before reversing sharply lower once the US data was released underpinning the US dollar and sending the Aud down to 0.7125, ending the week more or less at the day's lows. The charts suggest that further weakness could lie ahead and the bearish outside day seen in the Aud on Friday would support this view
The coming week will be busy for the Australian dollar with the New Home Sales, TD Inflation, Private Sector Credit and the China Leading Economic Index all due on Monday. Tuesday will focus on the RBA Interest Rate Decision, where no change to monetary policy is expected, and all the interest will lie in the wording of the following statement. A dovish leaning from Mr Stevens could well take out some of the wind out of the sails of the Aud. Wednesday sees the Q4 GDP and then on Thursday it will be the turn of the Trade Balance and the Caixin China Flash Manufacturing to provide direction. Finally, Friday sees the January Retail Sales although the direction is likely to be dominated later in the session by the US Jobs numbers.
A decline would initially test the Friday low at 0.7117 (55DMA) and then 0.7100, where the rising trend line off the multi year lows should see some decent buying. Below there would open the way to the 19 Feb low at 0.7068 and on towards 0.7040 (50% pivot of 0.6826/0.7258) and then to 0.7000 (0.6992: 61.8% of 0.6826/0.7258).
If and when we head below 0.7000, it would then open the way towards a deeper decline towards 0.6930(76.4% of 0.6826/0.7240), to 0.6918 (26 Jan low) and then to 0.6900 and lower, towards the trend low at 0.6826.
Economic data highlights will include:
M: HIA New Home Sales, TD Inflation, Private Sector Credit, China Leading Economic Index
T: AIG Performance of Mfg Index, RBA Interest Rate Decision/Statement
W: Q4 GDP,
T: AIG Performance of Services Index, Trade Balance, Caixin China Flash Manufacturing
F: Retail Sales .
Jim LanglandsFX Charts
