US dollar under pressure again overnight lifting weight off the Aussie dollar

March 13, 2014

What a strange market we have at the moment as concerns over China which drove Asian and European stocks sharply lower washed away by the time US trader entered the fray. How it is that the US markets could so easily shrug off the negativity with prices recovering their early weakness I just don’t understand.

Anyway at the close the Dow was down 0.07% while the S&P 500 was flat at 1,868. The Nasdaq was however in the black rising 0.37%.

In Europe the FTSE fell 0.97%, the DAX fell 1.28% and the CAC dropped 1.01%. Stocks in Milan and Madrid were 0.25% and 0.92% lower respectively.

Locally on the ASX futures trade overnight the march SPI 200 contract is up 2 points but well off yesterdays lows at 5372 bid.

On global FX markets the US dollar lost some ground with the Euro and Yen stronger and the Aussie recovering very well from the weakness yesterday that took it down to 0.8822. This morning Euro is up 0.33% to 1.3905, GBP is flat at 1.6618 and USDJPY is down 0.30% to 102.69.

Incredibly the Aussie is also up on the day at 0.8988 for a gain of 0.14% and it is going to be a very big day today for the Aussie after that recovery with the employment numbers released today at 11.30am AEDT.

Whether in the US or here in Australia the employment report is the number one market watched statistic released each month. This is kind of strange in many ways because it is the stat which is prone to the most error and has the broadest standard deviation relative to the number the market is looking for.

So it’s a number I learnt 25 years ago not to punt – but it is a number that is likely to cause the market to move afterwards. So lets look at the setup.

The pink line you can see on the 4 hour chart above is the daily uptrend from the low in January. yesterday’s break was decisive and the Aussie ran down to a low of 0.8922 but the rally has been very solid. 0.8993 was the overnight high and the fast moving average on this 4 hour chart which often works as resistance. A break will open a small run to 0.9003 and if 0.9013 gives way the Aussie might roar again.

On commodities copper for March deliver lost 0.31% to $3.02 lb which together with the fall of 1.84% in Nymex Crude for march to $98.14 (on a huge 6 million barrel build) suggests the US and global growth outlook continues to be re-rated. Gold rallied $20 or 1.51% to $1366

Gold is still solidly in its uptrend and while it’s tight up progress continues and the fast moving average continues to support on any pullbacks.

Top of the channel is $1388 support $1333.

On the Ags corn rallied 1.31%, wheat roared 3.73% but Soybeans sold off 2.11%. Continuing the Ag volatility Oats rallied 4.7% and have made up all the ground lost earlier in the week.

On the data front today Australia’s biggest number for the month will be released at 11.30 when the ABS announced the employment report. The market is expecting some payback after the last 2 month’s fall with an expectation of a rise of 18,000 jobs and the unemployment rate stable at 6%.

Chinese retail sales and industrial production might overshadow this data a little when released and this afternoon and then tonight’s inflation data in the EU is likely to focus traders about what is happening with deflation in the Eurozone. In the US its jobless claims, new housing price index and very importantly retail sales.

Have a great day and good hunting

Greg

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