AUDUSD, H1
AUDJPY declined as a risk appetite waned, with the good vibes of Friday failing to transfer to Asian markets today, where stock markets continued a sputtering price action (note, Chinese markets are still closed, will reopen tomorrow). A Bloomberg report cited Chinese officials saying that they are increasingly reluctant to agree to a broad trade deal, strengthening market narratives that have been arguing that a limited, and possibly term-limited, trade deal is the most realistic outcome given the course of strategic disengagement that both sides seem to be on. Face-to-face meetings between top-level US and Chinese representatives will take place later this week. Previous rounds of talks consistently disappointed, though the beleaguered US President may be more eager this time around to reach a deal.
Instability in Hong Kong and Brexit uncertainty remain on the worry list, while US-North Korea denuclearization talks appear to have broken down. S&P 500 futures were showing a loss of 0.4% heading into the London interbank open after the cash version of the index closed out on Wall Street on Friday with a 1.4% gain. The Dollar has traded in a typically narrow early-week ranges so far, and is little changed from pre-US jobs data levels. EURUSD has been flatlining around 1.0980 while USDJPY has settled in the upper 106.00s. AUDUSD and AUDJPY have drifted moderately lower, though both the pairing and the cross remained above their respective lows from Friday. Regarding the world’s biggest economy, while Friday’s jobs data tempered recession fears, the main takeaway from recent data, including the manufacturing and services ISM surveys, is that the growth is clearly decelerating.
AUDUSD gaped on open today and has continued to retrace last weeks rally that topped shy of 0.6775 following the more than 10-year low posted last Wednesday (October 2) under 0.6670. Today, there is support clustering below 0.6750, with S1 at 0.6746, the 200 period moving average at 0.6748 and the 23.6 Fibonacci at 0.6749. A breach of this level brings in the 38.2 Fibonacci level at 0.6735. Initial resistance is the 9 period moving average at 0.6752 and the 20 period moving average and Daily pivot point at 0.6760. The daily time frame remains biased to the downside with key resistance at the psychological 0.6800 level and 20-day moving average.
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Stuart Cowell
Head Market Analyst
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