The commodity currencies have leapt into action with the Australasian ones being the dominate players in today’s market. With the USD weakness continuing in the new year climate, traders have been quick to benefit and they are capitalising at a rather ferocious pace. But what is most surprising is that US economic news has been extremely positive thus far and today was no different with the ADP employment change jumping to 250k (190k exp). We did see a little blip with US initial jobless claims lifting to 250k (240k exp), but this could be of the back of the Christmas period as temporary seasonal jobs dry up for a bit. One of the major factors though for the USD weakness could be in fact the new FED chairman Powell coming in, as the market is waiting to see what sort of force he is likely to be.
For now though the AUDUSD has been surging on the charts on the back of a rise in the price of commodities. Underpinning this could be the trade balance figures due out in a few hours, which many are hoping provide some economic promise on the back of the recent jump, and may be the spark which lights up the hawkish comments from the Reserve Bank of Australia. Otherwise, we could be in for a correction if markets feel the AUDUSD has jumped a little too high in such a short space of time.
For the AUDUSD it’s likely that we will see some aggressive movement and resistance at 0.7864 is currently holding back the bulls from further movements higher. In the event we jump higher there is a potential trend line (in black) which could see an interesting bounce. If this fails, then I would expect the next level of resistance to come into play around 0.7926, just below the 80 cent mark. If the bears get a hold of things then support levels can be found at 0.7805 and 0.7750, but after a recent 6 month low it could be a hard ask to go much further down.
The NZD has also been benefiting heavily from the recent weakness in the USD and this can be seen on the charts for the NZDUSD. On top of this the most recent global dairy auction saw prices jump 2.2%, not huge, but still progress in the right direction for the primary industry focused nation. Confidence has been weaker as well since the recent election so the lift in the NZDUSD could be treated as a correction as commodity prices lift globally in the new year.
On the charts the NZDUSD has been lifting higher but I am weary of the potential trend line forming which could stop the bulls flying higher. Resistance seems a little further off at 0.7171, and is likely to be tested shortly. Above this is obviously the trend line and the next level at 0.7255. If the bears come back in swiping at a level failure then we could see a fall lower back down to support levels at 0.7080 and 0.7027, but I would be reluctant to say it will push through the 70 cent barrier in the current market climate unless we saw further drops in commodity prices, especially milk prices.