AUD Could Swing Higher as a Reversal Pattern Emerges, US Data Points are Main Risk Ahead
The Australian Dollar is at the whim of external drivers on Thursday, key is a strong GBP and a broadly under pressure USD.
Further gains for AUD?
Luc Luyet at MIG Bank tells us that the Australian Dollar could be set for a stint of strength; however, strong resistance points lie ahead:
"AUD/USD appears to be forming a short-term reversal pattern in the daily time frame, with a break over 0.9221 (12/08/2013 high) likely triggering a further swing higher. Should this occur a return to the 0.9500 region would become more likely.
"However, we keep in mind that if the current recovery phase were to gain traction and break out of the 0.8848 - 0.9319 range, strong resistance would be anticipated in the 0.9500 - 0.9600 zone, where short strategies would be strongly favoured." Click on the thumbnail for clarity).
ICN Financial Markets are Bullish on AUD saying:
"The AUDUSD bounced higher after testing 0.9080 support level, and the ascending trend line that carries the bullish wave. Extending the move to 0.9170 level, and approaching the 50-days SMA and previous high at 0.9215, accordingly, the bullish scenario remains favoured."
Australian Dollar waking from its slumber? US data will be the next key driver
The Aus Dollar remains below key resistance, can today's US data events prompt an extension of the rally?
Emmanuel Ng at OCBC says the AUD remains stuck in recent ranges versus the US dollar:
"The AUD-USD managed to firm slightly into late NY amid a mixed picture from the Aug Westpac consumer confidence index and the 2Q wage cost readings as well as some recovery in commodity prices. Intra-day, there may be little to disrupt the pair from its recent slumber ahead of the US numbers tonight. In the interim, the 55-day MA (0.9246) may continue to cap while initial support is expected on approach of the 0.9000 floor.
US Data Events Due Today
Looking ahead, data releases from the US will be key, can the US Dollar stage a comeback, and in doing so kill off this nascent Australian Dollar recovery?
According to Ishaq Siddiqi at ETX Capital this is what currency markets will be looking out for:
"We have jobless claims out later with forecasts of an uptick of people applying for welfare which will only confirm the market and Fed’s view that the labour market’s progress remains slow but positive nonetheless.
"It’s really the industrial output, Empire State manufacturing, Philly Fed and NAHB housing market reports which will be of keen interest as all are likely to reiterate the US recovery remains apace in these facets of the economy.
"Can’t blame investors for taking cash off the table in that case – indeed, tapering woes overshadow the only worthy data point out of Europe this morning."
The key numbers to look out for are:
- CPI (YoY) forecasts are for 2 pct, MoM figures are forecast at 0.2 pct.
- Consumer Price Index (CPI) Ex Food & Energy forecasts are for 1.7 pct.
- Initial Jobless Claims consensus forecasts are for a number at 335K.
- Industrial Production growth is forecast at 0.3 pct.
- Philadelphia Fed Survey forecasts are for a reading of 15.