The AUD weakened during the Asian session today as the Chinese manufacturing activity dropped, disappointing the markets. It should be noted that the drop of manufacturing PMI was also followed by a drop of the services PMI and the Caixin manufacturing PMI, all for April. Analysts point out that the drop consists a blow to hopes for global growth to rebound. The Aussie is considered as a close proxy for China, yet its drop could also lead other risk assets to also weaken. With the Chinese data already out for the week and Australian data left to release, we could see the Aussie taking a bearish momentum. On the other hand it should be noted that a fresh round of the US-Sino negotiations about trade is to begin. Should there be positive headlines or even better some concrete results, we could see the AUD strengthening. AUD/USD rose yesterday testing the 0.7065 (R1) resistance line. We could see the pair having some bearish tendencies in the aftermath of the release, yet at the same time we expect it to be sensitive to any headlines relating to the US-Sino negotiations. Should the bears be in control of the pair’s direction, we could see it breaking the 0.7000 (S1) support line and aim for lower grounds. Should the bulls take over, we could see the pair rising breaking the 0.7065 (R1) resistance line and aim for the 0.7120 (R2) resistance level.
USD weakens ahead of Fed and employment report
The USD weakened against some of its counterparts yesterday and especially the EUR. The move is considered as a correction of last week’s upward movement and in anticipation of the Fed’s interest rate decision. Also yesterday, despite the personal consumption accelerating somewhat, the core PCE prices showed a slight moderation. On the contrary the common currency strengthened as the market may be positioning for the release of favorable data later today. Especially the preliminary GDP growth rate for Q1 is expected to be closely watched, along with April preliminary CPI rates for Germany and France. We could see the EUR marking some gains should today’s releases favor it, if they fail the market, we could see an asymmetrical bearish reaction. EUR/USD rose yesterday breaking the 1.1175 (S1) resistance line (now turned to support). We could see the pair having some bullish tendencies, should today’s financial releases, favor the EUR side of the pair. If the pair finds fresh buying orders along its path, we could see it breaking the 1.1220 (R1) resistance line. Should the pair come under the selling interest of the market, we could see it breaking the 1.1175 (S1) support line and aim for the 1.1125 (S2) support level.
Other economic highlights, today and early tomorrow
On a busy Tuesday, we get in the European session, Germany’s GfK consumer sentiment for May, unemployment data for April and the preliminary HICP rate for April. From France we get the preliminary CPI (EU Norm.) rate for April and from the Eurozone the preliminary GDP growth rate for Q1. In the American session, we get Canada’s GDP for February and from the US the CB Consumer Sentiment for April, the Pending home sales rate for March and the API weekly crude oil inventories figure. Early in tomorrow’s Asian session New Zealand’s employment data for Q1 are to be released. As for speakers please note that BoE’s Ramsden is scheduled to speak while BoC Governor Poloz along with Deputy Governor Wilkins are to testify at the finance committee of the Canadian Parliament.
EUR/USD H4
Support: 1.1175 (S1), 1.1125 (S2), 1.1075 (S3)
Resistance: 1.1220 (R1), 1.1260 (R2), 1.1300 (R3)
AUD/USD H4
Support: 0.7000 (S1), 0.6925 (S2), 0.6840 (S3)
Resistance: 0.7065 (R1), 0.7120 (R2), 0.7150 (R3)
