The price of gold slipped in yesterday’s trading as the US treasury yields ticked slightly higher. At the time of writing this gold is trading 1.57% below the 5-day range high. At the same time, the price of oil remains in a tight trading range as oil traders reportedly are concerned about weak demand in Europe and South America. Iron ore prices have rallied 5.7% since the beginning of the month which reflects the increased industrial and trade activity in China.  By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

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Chinese exports grew by 30.6% (35.5% expected, 18.1% previous) while imports did equally well (38.1%, 23.3% expected, 6.5% previous). The low base values this time a year ago mean the current growth numbers are enormous. These numbers, however, still make it clear that the Chinese economy is recovering fast. The usually highly correlated AUDUSD though has failed to follow the iron ore price or to be impressed by the Chinese recovery. At the time of writing this AUDUSD is down by 0.31% in today’s trading. AUDUSD has been somewhat muted lately as the RBA has on several occasions reiterated their view that they don’t see the economic situation meriting higher rates for another two years or so. 

Trader’s main focus today is going to be in the US CPI release that takes place at 1:30 pm GMT. For more details on macroeconomic releases see our economic calendar.

AUDUSD has been trading in a range between 0.7532 and 0.7677 while the 20-day SMA has been acting as resistance since Wednesday last week. The hammer candle from March 31st is bullish but this far there hasn’t been significant follow-through buying. Now that relatively good news from China (increase in exports and imports) and rallying iron ore prices fail to lift the AUDUSD pair it makes it difficult to be very bullish on it. The nearest technical confluence area at 0.7645 – 0.7677 (recent swing high and the 20-day SMA) is the first resistance area that the bulls have to tackle in order to take the pair higher. Below the current market price, the nearest confluence zone at 0.7496 – 0.7545 (hammer candle low, 50% Fibonacci retracement level and rising trendline) is a likely support area on the downside.

Update: The last time we analyst the NZDCHF we pointed out that the pair was breaking the key support at 0.6508 and was moving lower. It was our view that unless the pair rallies and closes decisively above 0.6528 it is likely to move to our support area. Now the pair have almost hit our downside confluence area at 0.6450 – 0.6465 (38.2% retracement level and channel low).

Update: In our previous report, we said it looks likely the 1.6990 resistance is challenged sooner or later. Now the highest daily print since (today) has been 16981. We still believe that a decisive break above this level would indicate the 1.7050 – 1.7100 confluence area could come into play. A break below 1.6890 would make the technical picture bearish and indicate a reversal in the momentum.

Recent macroeconomic data releases

  • US Average Hourly Earnings -0.1%, 0.1% expected
  • US Non-Farm Employment Change 916K, 652K expected
  • US Unemployment Rate 6.0%, 6.0% expected
  • US ISM Services PMI 63.7, 58.3 expected
  • RBA Cash Rate 0.10%, 0.10% expected
  • Canadian Ivey PMI 72.9 62 expected
  • US Crude Oil Inventories -3.5M, -2.0M expected
  • US Unemployment Claims 744K, 682K expected
  • Canadian Employment Change 303.1K, 101.5K expected
  • Canadian Unemployment Rate 7.5%, 8.0% expected

Important macroeconomic data releases today

  • New Zealand NZIER Business Confidence -13, -6 previous
  • Australian NAB Business Confidence 15, 18 previous
  • Chinese Trade Balance 88B, 330B expected
  • Chinese USD-Denominated Trade Balance 13.8 Bn, 52.0 Bn expected
  • US CPI 0.5% expected
  • US Core CPI 0.2% expected

You may access the times and dates in the economic calendar here.

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Janne Muta
Chief Market Analyst
TIOmarkets.com

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