The Australian currency strengthened substantially against the USD during today’s Asian session as hopes strengthened that the coronavirus spread may have started to slowdown. The fact that workers have started going back to work boosted such hopes, as the Chinese government seems to have eased some restrictions on travelling. As per Reuters, analysts note that there are headlines about some large factories resuming work and reopening facilities in China. It should be noted that the death toll has now surpassed 900 according to media and is now considered more deadly than the SARS epidemic. However, it should be noted that the risks remain, especially on the economic side as supply chain issues, may start becoming more obvious, now that Chinese factories have opened. The Aussie strengthened upon Monday’s opening and should the news continue to boost the market’s confidence we could see it strengthening further. AUD/USD after its Friday retreat, strengthened against the USD during today’s Asian session, breaking the 0.6685 (S1) resistance line, now turned to support. We could see the pair continue to rise should the market’s confidence continue to support the Aussie. Should the pair come under the selling interest of the market, we could see it breaking the 0.6685 (S1) support line once again and aim for the 0.6650 (S2) support level. On the flip side, should the pair’s long positions be favoured by the market, we could see it breaking the 0.6723 (R1) resistance line and aim for the 0.6755 (R2) resistance line.
Pound continues to weaken
The pound continued to slip against the USD over Friday and during today’s Asian session as worries about the UK outlook, seem to continue to guide the market and the pound’s direction. The UK seems to have started pushing for new trade deals as the UK Foreign Minister visits Japan, while back home the UK government seems to be in search for the locations of 10 new free ports, according to media. On a different note, Sinn Fein won the Irish elections, tying the two traditional major Irish parties, yet the possible effect on Brexit remains to be seen. Should the pessimistic feeling about the pound continue to persist, we could see the pound continue to weaken. Cable continued to slip towards the 1.2820 (S1) support line, despite a slight correction during the Asian session. We maintain a bearish outlook for the pair and for it to change we would require a clear breaking of the downward trendline incepted since the 31st of January. Should the pair come under the control of the bulls once again, we could see it breaking the 1.3015 (R1) resistance line and aim for the 1.3170 (R2) resistance level. If the bears maintain control, we could see cable breaking the 1.2820 (S1) support line and aim for lower grounds.
Other economic highlights today and early tomorrow
During the European session, we get from Norway the CPI rate for January, as well as Switzerland’s CPI rate for the same month, along with Eurozone’s Sentix Index for February. In the American session we get Canada’s house starts for January and in the Asian session Australia’s Business Confidence for January.
As for the rest of the week
On Tuesday we get the UK GDP for Q4 and Fed Chair Powell testifies before Congress. On Wednesday we get RBNZ’s and Riksbank’s interest rate decisions as well as Eurozone’s industrial production for December. On Thursday we get from Japan the Corporate Goods Prices for December Germany’s HICP for January and the US CPI rate also for January. On Friday, we get Germany’s and the Eurozone’s preliminary GDP for Q4 and from the US the retail sales for January, the industrial production for January and the Uni. Michigan preliminary Consumer Sentiment for February.
AUD/USD 4 Hour chart
Support: 0.6685 (S1), 0.6650 (S2), 0.6610 (S3)
Resistance: 0.6723 (R1), 0.6755 (R2), 0.6790 (R3)
GBP/USD 4 Hour chart
Support: 1.2820 (S1), 1.2600 (S2), 1.2385 (S3)
Resistance: 1.3015 (R1), 1.3170 (R2), 1.3340 (R3)
