Aussie Rises on Jobs Data before falling on reports of a Chinese Coal Ban
Friday 22 February, 2019
Daily Currency UpdateThe Aussie raced to 0.7207 on Thursday following the stronger than expected domestic jobs data however the gains were short lived as AUD/USD slumped to 0.7070 later in the session. The dramatic fall was on the back of reports that China had banned Australian coal imports to all ports in northern China. AUD/USD did trim losses slightly and is currently oscillating just under the 0.7100 handle. AUD/NZD also fell, slipping below the 1.0400 handle to trade at 1.0397.
Focusing on the Jobs data, the labor market exhibited a steady unemployment rate of 5% whilst adding 39.1K jobs for the month. Today we see RBA governor Lower deliver parliamentary testimony at 9:30am which is expected to be a lengthy one, encompassing a three-hour Q&A session.
Overnight moves mean new technical levels of consideration for AUD/USD are 0.7053 on the downside and 0.7141 on the topside.
Key MoversThe New Zealand Dollar opened yesterdays Asian session around the 0.6850 level and found itself being dragged lower as the day went on, markets shifted their focus on the US-China trade talks and with China being one of the largest NZ customers the pair felt the pressure. Things didn’t change much offshore with the Greenback shrugging off a slew of negative U.S data pointing to signs of slowing growth in the underlying economy. The NZD/USD pair fell just below 0.68 and further risk to the downside can be expected.
Looking ahead we have Credit Card Spending due later today.
Immediate support-line can be seen at 0.6790, followed by 0.6740. Meanwhile, 0.6880 and 0.6890 seem nearby resistances to conquer for buyers ahead of looking at the 0.6905 and 0.6935 numbers to the north.
The Great British Pound is weaker today when valued against the Greenback. The GBP/USD pair reached an overnight high of 1.3094, just falling short of the 1.3100 level, on the back of comments from a UK official quoted saying that getting a Brexit deal by next week is unlikely.
On the release front today in the UK will only see the release of a CBI survey on realized trades.
From a technical perspective, the GBP/USD pair is currently trading at 1.3033. We continue to expect support to hold on moves approaching 1.3020 while now any upward push will likely meet resistance around 1.3100.
The greenback closed slightly higher for the day seeing a 0.12% rise on the US Dollar Index despite some disappointing data released in the United States. Opening at 96.53, Philly Fed Manufacturing Index came in at -4.1 and turned negative for the first time in three years. The sharp drop in February orders is in line with forecasts of a global industrial slowdown.
Dipping to intraday lows of 96.30 following the news, the decline in price was also contributed by an unexpected fall in durable goods orders. Despite the negative releases, the DXY traded in a tight trading range and finished in positive territory for the day and opens this morning at 96.63.
Several FOMC members are due to speak at the US Monetary Policy Forum in New York this evening with investors looking for clues for future monetary policy changes.
The Euro closed marginally lower Thursday having spent much of the day moving within tightly held ranges. Despite a slew of macroeconomic data sets the combined unit offered little to excite investors bounding between 1.1325 and 1.1365. French, German and broader Eurozone service PMI’s all expanded at a faster pace than anticipated in February, however a contraction in Manufacturing PMI’s countered short-term upside and raised questions about the pace of growth and economic performance across Europe.
A sustained period of weak data sets has prompted a bearish shift in inflation expectations and hopes for a tightening of monetary policy before year end. Key bond yields have been drawn lower further undermining demand for the 19-nation combined unit. With the Euro languishing near six month lows on key indicators risks are still skewed to the downside with support firming at 1.1250.
Attentions now turn to ECB president Mario Draghi as he hits the wires in Italy this evening. Investors will be keenly attuned to the underlying tone of comment with a dovish lilt possibly adding downward pressure into the weekly close.
The Canadian dollar is stronger this morning when valued against the Greenback. The Canadian dollar reached a 2-week high as U.S. Federal reserve preached patience regarding interest rate settings moving forward. The Federal Reserve has presented a dovish stance in 2019, and this position was underscored in the minutes from the January 2019 policy meeting.
On the release front yesterday ADP nonfarm payrolls rebounded with a sharp gain of 35.4k. Wholesale Sales posted a gain of 0.3%, beating the forecast of -0.2%. On Friday we will see the release of Retail Sales data for the month of December. Inflation in December was unexpectedly strong, and employment rose sharply in January.
From a technical perspective, the USD/CAD pair is currently trading at 1.3227. We continue to expect support to hold on moves approaching 1.3160 while now any upward push will likely meet resistance around 1.3240.
- AUD/NZD: 1.0320 - 1.0520 ▼
- GBP/AUD: 1.7950 - 1.8350 ▲
- AUD/USD: 0.7050 - 0.7190 ▼
- AUD/EUR: 0.6210 - 0.6350 ▼
- AUD/CAD: 0.9280 - 0.9480 ▼