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Forex: Chinese Data Surprises; Aussie marches on

Posted by Akhilesh Ganti on Feb 11, 2014 10:24:00 PM

Australia's Westpac Consumer Sentiment for February came out weaker than market expectations as it posted a -3.0% for the month bringing the index down to 100.3. The possibility of the RBA raising rates and pessimism on the employment front were cited as the main culprits for this disappointing release. The RBA has been projecting a slight uptick in consumption as the rise in housing and equity prices filters through the economy. Given that they are probably going to hold monetary policy steady for a while, the hope is that consumer sentiment should improve in the coming months. 

Japan's Core Machinery orders and Tertiary Industry activity numbers both came out much weaker as they posted -15.7% and -0.4% respectively -vs- analyst estimates of -4.1% and -0.2%. China's Trade balance for January came out at + $31.9 Billion, far exceeding both market expectations of + $24.2 Billion and last month's reading of + $25.6 Billion as both exports and imports posted huge increases. This surprising result saw the AUD/USD, which had been trading around 0.9015, ratchet higher as it broke above resistance at 0.9050.

audusd 021114 W

Australia's employment data is slated for release tomorrow and, with expectations guarded after last month’s disappointment, the risk is for a positive surprise which would cause investors to upgrade the prospects of an economic recovery. The AUD/USD has been exhibiting bullish overtones after the RBA announced their decision to move to a neutral stance as it looks to correct its extremely oversold state and a robust employment number could provide the impetus for the currency to continue its march higher. A look at the weekly chart (click to enlarge) shows that a convincing breach of moderate resistance at 0.9085, which also coincides with the 38.2% retracement level of the down move from 0.9760 to 0.8658, could pave the way for a test of the 50% retracement level, which comes in around 0.9212, on a multi week basis.

Ranges:{WWM's New ALPHA Trader-DAILY charts [EUR,GBP,AUD,YEN,GOLD,OIL,WallStreet]}(click to enlarge)


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