By Fast Brokers – The Aussie surged above key downtrend lines yesterday after employment changed data topped analyst expectations. Additionally, Australia’s headline unemployment rate printed two basis points below analyst expectations. Meanwhile, China’s trade balance revealed a larger than expected surplus, indicating demand for Chinese exports is strong. Hence, China’s GDP growth rate could stay on track despite new retail state regulations, a positive for the Aussie due to Australia’s reliance on Chinese demand for its natural resources. However, upward momentum in the Aussie has been capped at .85 right now after today’s data showed that prices in China are rising at a faster rate than anticipated while industrial production cools. Therefore, China could be forced to raise rates and cool growth further despite rumblings in the EU. Hence, China’s economic picture is not as rosy as yesterday’s trade balance data made it seem. Regardless, gains in the Aussie from June lows are encouraging and stabilization in the EUR/USD and Cable is certainly positive. We’ll have to wait and see whether the risk trade can extend this week’s upward momentum into a more substantial upswing. Whether the risk trade ends the week on a positive note will depend on the outcome of upcoming U.S. consumption data with retail sales and consumer confidence on tap. If U.S. consumption-related data tops analyst expectations this could boost the Aussie beyond .85. On the other hand, disappointing U.S. data could keep the Aussie and risk trade as a whole at bay.
Technically speaking, the Aussie faces technical barriers in the form of intraday and 5/28 highs. As for the downside, the Aussie has supports in the form of uptrend lines running from May lows along with 6/10 lows.
Price: .8468
Resistances: .8469, .8500, .8523, .8547, .8565, .8587, .8617
Supports: .8455, .8435, .8408, .8395, .8379, .8361, .8344
Psychological: .85
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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