AUD/USD: a sell on rallies below 0.7450, target 0.7328 cloud top?
Currently, AUD/USD is trading at 0.7384, down -0.63% on the day, having posted a daily high at 0.7456 and low at 0.7373.
AUD/USD is consolidating the bearish trend after a series of key data releases overnight and today. Firstly, risk-off markets yesterday were an anchor on any bullish attempts despite dollar weakness with a drop in iron ore prices of 3% in the US shift with weak WTI below $48.00. In Asia, the Aussie was fragile but got a lift on retail sales and CAPEX. AUD/USD rallied to 0.7450, (a key level where a large option expiry in AUD 891mn strike - 0.7455 is located fro tomorrow).
Main topics in Asia for AUD
- Australia's CAPEX: 2nd estimate for 2017/18 higher-than-expected: "Australian capex (private capital expenditure) for Q1 shows a capex 'headline' of +0.3% q/q vs 0.8% expected and -1% last (revised from -2.1%)."
- Australia's retail sales rebound beyond expectations in April: "According to the latest data from the Australian Bureau of Statistics (ABS), Australia's April retail sales came in at +1.0% m/m vs +0.3% expected and -0.2% (revised lower) last."
- China's May Caixin PMI dips into contraction, a big miss on expectations: "China's Caixin manufacturing PMI for the month of May arrived at 49.6 vs 50.1 exp and 50.3 last, entering into contraction on the back of slower increases in output and new orders."
However, the Chinese data was a miss and sent the Aussie lower again. Chinese Caixin manufacturing PMIChina's Caixin manufacturing PMI for the month of May arrived at 49.6 vs 50.1 exp and 50.3 last, entering into contraction on the back of slower increases in output and new orders. This sent the Aussie down to 0.7380. AUD recovered back to 0.7420 in Europe, but the break of the 0.74 handle was a significant accomplishment for the Bears and has left the Aussie vulnerable to a recovery in the greenback. Today's ADP was strong a prelude for tomorrow's nonfarm payrolls data.
US: Private-sector employment increased by 253,000 from April to May - ADP
"In May, the US economy is expected to have added 185,000 new jobs, a decent figure but below the 211K added in April, " noted Valeria Bednarik, chief analyst at FXStreet within the nonfarm payrolls preview: Nonfarm Payrolls Preview: get ready to be disappointed; Again ...
The US dollar has also found strength, with the DXY up 0.33% at time of writing and back above the 97 handle at 97.241, in US: Economic activity in the manufacturing sector expanded in May - ISM
AUD/USD levels
AUDUSD is firmly in red, probes below strong Fibo support at 0.7400
"Extension of bear-leg from 0.7475 (31 May high) cracked strong support at 0.7400 (Fibo 61.8% of 0.7328/0.7517 rally) with close below to signal further weakness.
Thursday's fresh bearish acceleration also completed Failure Swing pattern on daily chart which is seen as strong bearish signal. Below 0.7400, next target lies at 0.7373 (Fibo 76.4% retracement), with extension towards key support at 0.7328 (09 May low/weekly cloud top) not ruled out," - Slobodan Drvenica at Windsor Brokers Ltd.