AUD/USD: dropping back on 0.73 ahead of BIG day ahead

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 3, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - AUD/USD is currently trading at 0.7332 with a high of 0.7350 and a low of 0.7325.

    AUD/USD has dropped back in early Asia ahead of the Tokyo session after a volatile day of being better bid overall. We went from yesterday's highs of 0.7347 down to 0.7289 territory and moved on the ECB presser back on the bid and up to 0.7362 highs.

    Apart from commodities being better bid and the ECB catalyst, the US data has not been dollar friendly to the greenback either. The PMI's this week have been a big disappointment and the non-manufacturing PMI for Nov came in at 55.9 vs 58.0 expected. This coupled with a continuation of a contraction in the manufacturing sector does not stand well for the US economy.

    "OPEC meets in Vienna, with some sources talking about a potential deal to reduce output, contributing to the 3.4% gain in Brent crude oil on Thursday. But this only came after 5 straight days of decline. The press conference is 4pm local time." - Westpac

    Nonfarm Payrolls coming up

    However, this is overshadowed by the forthcoming Nonfarm Payrolls that is geared up to be positive in light of the ADP report and both come as a prelude to the FOMC meeting this month where the stakes are stacked higher after Yellen's 2hr testimonial to Congress today where she basically set markets and investors up for a Fed hike.

    AUD/USD next catalyst - Retail sales

    Next up, Aussie retails sales, expected at 0.5% vs 0.45 prior. But Westpac is more optimistic, on 0.6%. Sean Callow at Westpac explained, "We view the underlying trend as a little soft compared to consumer sentiment and business surveys on turnover so expect some uptick in the overall pace of spending. Recall that Q3 household consumption in the national accounts was quite encouraging, with the saving rate dropping."

    AUD/USD levels

    Technically, below the bias still remains to the downside below the 200 DMA at 0.7462. However, the probing of the 0.7350 level opens up the potential for 0.7380 before the psychological 0.7400 level. Whether markets are able to extend the upside that far ahead of the main catalyst tonight in the Nonfarm Payrolls is unanswered and the Australian retail sales figures is an unlikely event to cause huge demand. Therefor, another bout of supply would see the 0.73 under pressure again.

    The downside will target the 100 SMA at 0.7270 on the hourly time frames. Below here is the 200 SMA at 0.7247. The key 0.7200 psychological level is next target for the bears where the 100 DMA is located at 0.7194 and a subsequent break of the 55 DMA at 0.7162 should open up territory towards the 0.7017 November low and the September low at 0.6940.
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