The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
EUR/USD was put on the back foot by Friday’s disappointing German factory orders reading. Additionally, the US dollar just continues to enjoy a bout of strength following the stellar jobs reading. With plenty of Fedspeak on the way this week, there is a good chance we’ll continue to hear some fairly hawkish commentary and this poses a reversal risk to the current moment.
EUR/USD is back below 1.3600 and a retest of lows in the 1.3500 region following the ECB meeting a month ago could be on the cards. On the European economic calendar today we have German industrial production being the only release to look out for.
AUD focusing on jobs numbers
Meanwhile AUD/USD seems to have broken below the uptrend support which has been in place since February after a close below 0.9360. Glenn Stevens’ jawboning last week seems to have worked despite the Governor himself saying he’s refraining from ‘jawboning’. This seems to have spooked some traders who are bullish on the local currency and resulted in the support being broken. The most important release this week will be local jobs numbers on Thursday. Should we see weakness in the jobs data then there is a good chance the AUD will extend its losses.
ANZ job ads showed a bit of an improvement today but this still wasn’t enough to trigger an AUD recovery. Tomorrow we’ll have NAB business confidence and Westpac consumer sentiment on Wednesday. On Thursday we will also get the official jobs number which is expected to show a pickup in employment change and a rise in the unemployment rate.
There will also be a bit of activity out of China with CPI and trade balance due out Thursday/Friday. Traders are likely to be looking to sell AUD/USD on moves back into the previous uptrend support. Unless we see some fresh catalysts, this could be the preferred strategy this week.