AUD/USD on the brink ahead of NFP

2 July, 2015

The US monthly jobs report will be released a day earlier than usual today and analysts are feeling bullish as expectations are that the headline nonfarm payrolls number probably increased by a good 230 thousand in June. The unemployment rate is likely to have fallen back to 5.4% from 5.5% in May, while the average hourly earnings are seen increasing by 0.2% versus a gain of 0.3% previously. As ever, my colleague Matt Weller has produced his excellent preview for the jobs data and if you are interested to read more, you can do so HERE.

Ahead of the jobs report, the dollar is looking strong, particularly against the commodity currencies due to the weakness in oil and metal prices. The New Zealand and Australian dollars in particular look bleak following the release of some weaker data overnight from those nations, as my colleague Chris Tedder reported HERE and HERE. Indeed, it is the AUD/USD that has caught my attention today as it appears to be on the verge of a technical breakdown as expectations grow that the interest rate differential between the Australian and US central banks will narrow. This view would get stronger if today’s US jobs data surprises to the upside which would undoubtedly increase calls for a September rate hike at the Federal Reserve.

As the daily chart of the AUD/USD shows, below, price is currently hovering dangerously above the 0.7600 handle, which has been a strong support level in the past. Today it could finally break down and the trigger could well be the US jobs report. If it does break lower, we think that the fallout would be significant. That’s because of the length of time the Aussie has spent in consolidation above this 0.7600 level. What’s more, the most recent rally only managed to climb to the 38.2% Fibonacci level (point C on the chart), which represents a shallow retracement. This suggests that the bulk of the market participants are probably positioned short and that if prices were to break down then the next leg lower could be significant as the existing bulls rush for the exits and fresh sellers come into play.  In fact, the AUD/USD has already broken a bullish trend line after its key reversal day on Wednesday, when price formed a large bearish engulfing candle on the daily chart. The resistance trend is clearly established and there are bearish MACD crossovers on the 4-hour and daily charts, too.

If the bears succeed here, as we think they might, and take out the 0.7600 support, the immediate targets to watch next would be around 0.7530/5, the April low and the 127.2% extension level of the up-move from the June low (BC swing); 0.7500, a psychological level and then 0.7440, the 161.8% extension of the  BC swing. Thereafter are the longer-term Fibonacci extension levels of the upswing from the April low, at 0.7360 (127.2%) and 0.7140 (161.8%) – i.e. those of the XA swing.

Meanwhile the above-mentioned bearish setup would become invade if the Aussie breaks above the bearish trend line around 0.7700. In this case a rally towards the key resistance and the 50-day SMA around 0.7800 could be highly likely.


Source link  
Gold surges to major $1250 resistance as uncertainty prevails

Gold surged Thursday on a breakout of its previous consolidation to hit and slightly exceed major technical resistance at $1250, a level not seen since early November...

Gold remains vulnerable amid hawkish Fed, strong dollar, equity highs

Gold has climbed sharply since the beginning of the year as the US dollar has pulled back from its late-2016 highs and the US Federal Reserve has exercised characteristic restraint in raising interest rates further after the last rate hike in December...

Gold well-supported on safe-haven flows, lagging dollar

Increasing political and economic uncertainties under the new Trump Administration, coupled with a sliding US dollar since the beginning of the year, have led to a sharp rise in gold prices for more than a month...


Gold pressured as dollar and equities remain supported

As the US dollar found some new life on Thursday and US equity markets hovered right around their new all-time highs, gold extended its recent pullback well below the $1200 handle. Since late December, the price of gold had been in a sharp relief rally from its 10-month lows around $1125 support...

Crude oil maintains bullish trend

Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal...

Trump press conference fails to deter equity bulls

President-Elect Donald Trump spoke on Wednesday morning at his first formal press conference since the November elections, and the markets were all ears. Trump covered a lot of ground with multiple topics that included...


Gold ripe for potential relief rally

The charts tell a clear story of the unrelenting plunge in gold prices since early November. This steep dive has been the result of several related factors, all of which have the potential to extend well into the new year. These largely Trump-driven factors include...

Could EUR/USD finally break 1.05 on this FOMC day?

The market is demanding a rate rise and the Fed better deliver it today, for if it doesn’t the bank’s credibly will be severely damaged. There is really no excuse not to do so. Economic data has been improving, financial markets are calm...

Mixed Jobs Report Keeps High Fed Expectations Intact

As we noted the day before Friday’s US jobs report, only a significantly worse-than-expected reading for November would have likely made the Federal Reserve’s next interest rate decision more difficult...

  


Share: