The Aussie jumped during today’s Asian session, as the employment data showed that the unemployment rate for September ticked down to 5.2%. The positive sentiment was not overturned, even with the drop of the employment change figure, which reached the expected levels, a bit below 15k. The improvement is expected to lift some of the pressure for RBA to cut rates, especially after the release of the minutes of the bank’s last meeting indicated the weight that the bank places on the Australian labor market. Analysts tend to note that the release provides a breathing space for the bank, in which it could measure the effectiveness of prior cuts. We tend to focus on RBA governor Lowe’s speech later today in Washington, as well as the Chinese data in the Asian session tomorrow, for further clues. AUD/USD rose yesterday during the American session, breaking the 0.6740 (S1) resistance line, now turned to support and advanced further as the Australian employment data favoured the Aussie during today’s Asian session. We could see the pair correcting somewhat lower today, yet we could see the pair advancing further, should the USD side be weakened, say for example by today’s financial releases. It should be noted though that the release of the Chinese data tomorrow could also play a major part in the pair’s direction. Should the pair find fresh buying orders along its path, we could see the pair, breaking the 0.6800 (R1) resistance line and aim for the 0.6860 (R2) resistance level. On the other hand should the pair come under the selling interest of the market, we could see it breaking the 0.6740 (S1) support line and aim for the 0.6675 (S2) support level.
USD weakens of poor retail sales growth rates
USD weakened yesterday, as investors were shocked by the release of the US retail sales growth rates for September. Both the headline and core retail sales growth rates entered the negative area, showing a contraction, with the headline rate getting a minus sign for the first time after 7 months. The release strengthened arguments for a possible rate cut by the Fed in its next meeting, as consumption is one of the pillars the bank relies on. It should be noted that the USD had already started to slip, as further doubts about a possible US-Sino deal gathered. We could see the USD becoming more data driven should there be further adverse financial releases, in the coming days. The USD Index continued to drop yesterday, breaking the 97.86 (R1) support line now, turned to resistance. We maintain a bearish outlook for the index, and for it to change, we would require a clear breaking of the downward trend line incepted since the 9th of October. Should the bears maintain control over the indexes’ direction, we could see it breaking the 97.57 (S1) support line and aim for the 97.25 (S2) support level. Should the bulls take over, we could see the Index, breaking the 97.86 (R1) resistance line and aim for the 98.13 (R2) resistance level.
Other economic highlights today and early tomorrow
In today’s European session, we get UK’s retail sales growth rates for September. In the American session, we get from the US the Philly Fed business index for October, the initial jobless claims figure, the house starts figure for September, the industrial production growth rate for September and EIA crude oil inventories figure. In tomorrow’s Asian session, we get Japan’s inflation rates for September and from China the GDP growth rate for Q3, the industrial growth rate for September and the retail sales growth rates also for September. As for speakers please note that ECB’s Benoit Coeure, Chicago Fed President Evans, RBA Governor Lowe and NY Fed President Williams are scheduled to make statements today.
USD Index H4
Support: 97.57 (S1), 97.25 (S2), 96.94 (S3)
Resistance: 97.86 (R1), 98.13 (R2), 98.43 (R3)
AUD/USD H4
Support: 0.6740 (S1), 0.6675 (S2), 0.6610 (S3)
Resistance: 0.6800 (R1), 0.6860 (R2), 0.6910 (R3)
