Aussie finds support in the run up to employment this morning

September 11, 2014

A big 24 hour for the Aussie dollar with a rally back above 92 cents finding sellers – suggesting some position square up – before a run below the range bottom and 200 day moving average saw the stop run which eventually ended in Europe at 0.9110 when overall market sentiment turned and US stocks pushed higher.

In terms of the Aussie fall and the “where to from here” it looks like a classic clash of time frame. Overcooked on the 1 and 4 hour charts last night European sell off was the perfect opportunity to wait for the turn or a technical signal.

That signal on the hourlies is self evident above.

On the dailies it would not be beyond the realms of possibility to see the Aussie trade back to 92 cents to retest the break. Employment is the key risk and pressure point today at 11.30am

So recapping the Aussie found support at 0.9110 and is back at 0.9158 as the market awaits an expected solid employment report. Euro sits at 1.2918, Sterling at 1.6203 and USDJPY is closing in on the 107 region.

The Yen is really over cooked on a daily basis and looks likek it could be in for some sort of retracement or pause, similarly the Euro. So we might see a halt to the recent US dollar rally for a bit. But the trend looks entrenched now.

While bond traders, especially in Germany called for the ambulance with wild price action over the last few days their was no such scaring in US equities which continued their rally after a two day hiatus. The Dow was up 55 points to 17,069 for a gain of 0.32%. The Nasdaq rose 0.76% to 4,587. Tech companies Apple and Twitter did well gaining 3% and 5% respectively. On the broader market the S&P 500 was up 8 points to 1,996 for a gain of 0.38%.

In Europe stocks weren’t doing to well as Europe tried to catch up with the previous days fall in the US but these moves were reversed once the US market started marching forward. At the close the FTSE was unchanged at 6,830, the DAX recovered to be only down 0.11% to 9,700 and the CAC was becalmed by the close of play to 4,451. Stocks in Milan and Madrid were similarly quiet by the end of the day after early falls.

Locally the good news for longs is that hte moves overnight rescued the ASX from yesterday’s weakness with the SPI 200 September contract up 18 points to 5,594 while the December contract rose 23 to 5,593.

In Asia yesterday Shanghai dipped 0.37% to 2,318 as traders digest recent strong gains. The Hang Seng had one of its worst days in six months yesterday closing 1.93% lower to 24,705. No doubt it will – or should – recover somewhat today. The Nikkei continues to benefit from a weak Yen up 0.25% to 15,789.

On commodity markets iron ore fell 14 cents for the September contract to $83.56 but October, November and December contracts rallied an average of 50 cents. Newcastle coal rose marginally for September delivery to $66.20 a tonne.

Crude dipped another 1.11% to $91.72 a Barrel – that has to be good news at the bowser. Gold is just below $1,250 and ounce and silver has dipped back below $19 an ounce. Copper closed at $3.11 a pound and on the Ags wheat fell 1.33%, corn rose 0.52% and soybeans dipped 1.11%.

On the data front today’s employment report for Australia at 11.30 is going to be a huge risk event for Aussie dollar traders so watch out. The markets is looking for an increase of 15,000 and a drop in unemployment to 6.3%. Chinese CPI is out as well which will be important along with new loans. German CPI tonight will hold a little less interest and in the SU we get jobless claims.

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