Market Quiet in Holiday Mood, Aussie and Canadian Firm

The forex markets are generally steady in Asian session today. Trading is rather subdued with US markets on holiday. But volatility will definitely come back with job data tomorrow. For the week, Canadian Dollar is currently the strongest one but USD/CAD is still struggling take out last week’s firmly. Australian Dollar is currently the second strongest for now. On other hand, European majors are generally lower, led by Swiss Franc, followed by Sterling then Euro.

Technically, AUD/USD’s break of 0.7022/34 resistance is tentatively taken as a sign of near term bullish reversal. Further rise is expected as long as 0.6956 support holds, for 0.7205 resistance. USD/CAD is still pressing 1.3052/68 cluster support zone. Firm break there will carry medium term bearish implications. Dollar’s rebounds versus Euro, Swiss and Sterling are losing momentum. Some sideway trading is likely for the rest of the day.

In Asia, Nikkei closed up 0.27%. Hong Kong HSI is up 0.01%. China Shanghai SSE is down -0.17%. Singapore Strait Times is up 0.23%. Japan 10-year JGB yield is up 0.0013 at -0.155. Overnight, DOW rose 0.67%. S&P 500% rose 0.77%. NASDAQ rose 0.75%. 10-year yield dropped -0.023 to 1.953.

WH Kudlow: Won’t lift tariffs during trade talks with China

White House Economic Adviser Larry Kudlow said US-China trade negotiations will “continue in earnest this coming week”. The teams are “on the phone” and are “going to be on the phone this coming week”. He doesn’t know “precisely when” but the teams will be scheduling face-to face meeting.

Meanwhile, Kudlow emphasized that “We’ve been accommodative. We will not lift tariffs during the talks” He added, “we are hoping that China will toe its end of it by purchasing a good many of American imports.”

Australia retail sales rose 0.1%, missed expectations

Australia retail sales rose 0.1% mom in May, below expectation of 0.2% mom.

ABS Director of Quarterly Economy Wide Surveys, Ben James said: “There were mixed results across the industries with rises in Cafes, restaurant and takeaway food services (0.7%), Household goods retailing (0.5%), and Other retailing (0.6%). These rises were offset by falls in Food retailing (-0.3%), Department stores (-0.4%), and Clothing, footwear and personal accessory retailing (-0.2%).”

In seasonally adjusted terms, there were rises in Victoria (0.6%), South Australia (0.5%), the Australian Capital Territory (0.7%), and the Northern Territory (0.5%). There were falls in Queensland (-0.3%), New South Wales (-0.1%), Western Australia (-0.2%), and Tasmania (-0.4%).

Looking ahead

Swiss CPI and Eurozone retail sales will be released in European session. US calendar is empty today for holiday. Focus will mainly be on job data from US and Canada tomorrow.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6998; (P) 0.7019; (R1) 0.7051; More…

AUD/USD’s rebound from 0.6831 resumed by breaking 0.7034 temporary top. Current development confirmed short term bottoming at 0.6831. Intraday bias is turned back to the upside for 61.8% retracement of 0.7295 to 0.6831 at 0.7118 first. Sustained break till target 0.7295 resistance next. On the downside, break of 0.6956 support, however, will indicate completion of the rebound. Intraday bias will be turned back to the downside for retesting 0.6831 low.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Economic Indicators Update