Daily Report: Aussie Soars on Strong China Data

Australian dollar rode on strong trade data from China and surged across the board in Asia today. Chinese exports rose an impressive 45.7% in February, well past expectations, after another strong jump of 86% in January. Imports rose 44.7% and trade surplus narrowed to $7.61b. The sustained strength in China's trade is a source of support for global economy. As the top buying of Australia's exports and strong demand of commodities, it was particularly important in keeping Australia away from recession during the economic crisis.

Aussie's strength is felt across the board today with AUD/USD jumping further to as high as 0.9161. EUR/AUD has also met the target of 100% projection of 2.3085 to 1.7145 from 1.8098 at 1.4858 mentioned yesterday and should be targeting 1.5 psychological level. GBP/AUD dived further to as low as 1.6330 so far and the down trend is still in force for 61.8% projection of 2.0979 to 1.7326 from 1.8276 at 1.6018, 100% projection of 2.7092 to 2.0231 from 2.2877 at 1.6016, which are also close to 1.6 psychological level. We'd expect further fall in the cross as low as 1.6757 resistance holds.

Elsewhere, dollar continues to stay in tight range against other major currencies. Dollar index's recovery overnight was limited below 80.88 minor resistance and thus, consolidation from 81.34 is possibly still in progress. Risk of another fall remains but after all, we're expecting strong support from 79.56 cluster support (38.2% retracement of 76.60 to 81.34 at 79.52) to conclude the consolidation and bring rally resumption. Above 80.88 minor resistance will flip intraday bias back to the upside for retesting 81.34 high first.

On the data front, Australia westpac consumer confidence rose 0.2% in March. Japan domestic CGPI dropped -1.5% yoy in February. Machine orders dropped -3.7% mom, -1.1% yoy in January. German trade balance, CPI, UK industrial and manufacturing production and US wholesale inventories will be released later today.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.9080; (P) 0.9114; (R1) 0.9172; More

AUD/USD's rally resumes after brief consolidation and reaches as high as 0.9161 so far today. Intraday bias is on the upside for the moment and further rise should be seen towards 100% projection of 0.8577 to 0.9070 from 0.8802 at 0.9295 next. On the downside below 0.9053 minor support will turn intraday bias neutral again and bring consolidations. Nevertheless, break of 0.8802 support is needed to indicate that rise from 0.8577 is finished. Otherwise, another rally is still in favor in case of pullback.

In the bigger picture, the sustained trading above 55 days EMA (now at 0.8975) suggests that correction from 0.9404 has completed with three waves down to 0.8577 after hitting medium term rising channel support as well as 23.6% retracement of 0.6008 to 0.9404. In other words, whole rally from 0.6008 might be set to resume for another high above 0.9404. If we treat the rise from 0.8577 as the fifth wave in the rise from 0.6008 with equal length as the first wave from 0.6008 to 0.7267, upside target will be 0.9836, which is close to 2008 high of 0.9849. On the downside, break of 0.8802 support is needed to be the first signal to revive the case that AUD/USD has already topped out. Otherwise, we'll remain cautiously bullish in AUD/USD.

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