Employment the key to a higher Aussie dollar

September 12, 2013

Fairly boring overnight with relatively quiet trade but in some senses it was also a big night.

The new Apple iPhone went over like a lead balloon for Apple which feel more than 5% but the ARM chip maker rallied hard in European trade. Equally Verizon got the biggest corporate bond ever away selling $49 billion of 10 years bonds at 5.19% which I personally reckon is cheap given what they are using the money for and the way that cost of capital works. It’s just another sign of the impact of super low rates.

Broadly though markets were positive but fairly quiet by recent standards but the stand out thought processes appear to have been relief that the Syrian issue might find a diplomatic resolution and hope that the FOMC might only taper by a little, or nothing at all, after next week’s FOMC meeting.

Apples fall saw the Nasdaq and S&P 500 underperform the Dow which continued its positive run higher. At the close the Dow was up 136 points at 15327, the Nasdaq was 0.11% lower and the S&P 500 was 5 points higher at 1689. In Europe Shares rallied into the close to lift the FTSE and CAC 0.06% into the black, the DAX closed up 0.59%, while stocks in Milan and Madrid were 1.33% and 0.83% higher respectively

Forex markets are just trading in a range mostly with the Yen gaining a little ground on the USD which fell back under 100 and is sitting at 99.94, the Euro is back above 1.33 at 1.3308 and the Pound also gained rising 0.57% to 1.5823.

Locally the Aussie dollar benefited from the strong Westpac Consumer Sentiment data yesterday and an overall more positive tone in markets. Sitting at 93.30 just below the high of 93.38 cents overnight the Aussie looks poised for a break out if it can find the impetus, or a reversal. Employment data today is key

Employment holds the key

While for me the NAB Business survey is the most important data release each month the market tends to focus more on the unemployment number which is due out later this morning. One of the reasons I don’t like employment is that the guesstimate of the punditry is usually well inside the standard error of the data which means that it is really just a guess.

But it is a market moving guess so any deviation from the 10,000 jobs expected today will move the Aussie dollar up and through 93.50 if strong or reinforce the top of the range and see the AUD reverse back inside the range.

As you can see in the chart above the Aussie is already breaking higher but it feels like 93.50 is the key level where stops will lurk and a big push higher will reside. If that occurs then the run toward 96 cents has begun.

On the downside support is 92.75, 92.25 and then 91.75 cents.

Gold needs to hold $1350

After the Syria induced rally that drove gold up to $1433 before the sell off and then move back into the $1413 region gold this morning is around $1361/2 oz. The jury is out technically on where it is going but there is a very key level in $1349/51 that gold needs to hold in order to rally higher again. If it breaks then it is a retracement toward 1273 maybe even all the way to the lows.

On commodity markets Nymex Crude is at $107.70 mostly unchanged as is gold which is is at $1361 oz. Corn rose 1% and coffee bounced 3.25%.

On the data front today the RBNZ meets in New Zealand, Japanese Investment and machinery orders data is released and then Employment data in Australia. bank Indonesia has a meeting,and Indian manufacturing data is out before European industrial production and Italian CPI data. In the US its jobless claims, export and import prices as well as a 10 and 30 year auction.

Have a great day and good hunting

Greg

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