Aussie stays in right range against the greenback despite the relatively update RBA minutes. The minutes showed that the central bank expected recovery in the global economy to list resources exports. And, "the higher terms of trade represented a boost to national income, which provided some upside risks to the domestic forecasts." 2017 is forecast to be a good year with 3% GDP growth, "above estimates of potential growth over the rest of the forecast period." Outside of mining, RBA expected that the rise in building approvals over the last year suggested that "non-residential building construction would contribute to GDP growth towards the latter part of the forecast period." In addition, RBA also predicted that "recent pick-up in global inflationary pressures could flow through to domestic inflation by more than expected". Meanwhile, RBA sounded more confident that "Chinese growth would remain resilient in 2017." But it also warned that "China continued to be one of the main sources of uncertainty for the Australian economy."

Japan PMI manufacturing hit 3-year high.

Japan PMI manufacturing rose to 53.5 in February, up from 52.7 and beat expectation of 52.1. That’s also the highest level since March 2014. Markit noted that "Japan’s manufacturing engine shifted into a higher gear during February, as faster increases in output, new business and employment were reported." And, "encouragingly, with backlogs of work accumulating for the first time in 14 months, the added pressures on capacity should ensure growth will be maintained at a solid pace during at least the first half of this year." Also from Japan, all industry activity index dropped -0.3% mom in December, below expectation of -0.2%.

Euro stays soft on political worries

Euro turns softer again as markets are cautious on French election in April and May. Some analysts point to the face that investors are on the defensive as the world was full of political surprises last year. And that could be a trend that upset the current order further. A poll by Paris-based political research group Opinionway showed on Monday that Marine Le Pen, the anti-Euro far-right candidate, has gained more support in her campaign. Le Pen could win 27% in the first round of vote in April, but without a majority. At this point, centrist Emmanuel Macron and conservative Francois Fillon are favorite to face Le Pen in the run-off in May. But the situation was clouded by agreement between leftist candidates to join force. And in addition to France, the Netherlands, Germany and possibly Italy too will have elections later this year.

PMI data to highlight the day

PMI data will be the main focus today. Eurozone, Germany and France will release both manufacturing and services PMI in European session. Swiss trade balance and UK public sector net borrowing will be featured. US will also release PMI manufacturing and services.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7643; (P) 0.7677; (R1) 0.7699; More…

AUD/USD is staying in tight range below 0.7731 and intraday bias remains neutral for the moment. Outlook is unchanged. With 0.7605 minor support intact, further rise cannot be ruled out yet. However, considering bearish divergence condition in 4 hour MACD, we’d expect strong resistance from 0.7777/7833 resistance zone to limit upside and bring near term reversal. On the downside, break of 0.7605 support will indicate that rise from 0.7158 has completed already and turn bias back to the downside for 55 day EMA (now at 0.7539) first.

In the bigger picture, we’re still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seek to 55 month EMA (now at 0.8186) and above.

Economic Indicators Update

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box