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US economic data in focus

Five markets in focus today.

Spot gold

Gold could trade down to the lower band of the Bollinger band on the daily chart of $1210 if we get strong data out of the US tonight. On the docket in the US we get November ADP private payrolls (consensus calling for 170,000), October trade balance (to narrow slightly to $40 billion), services ISM and new homes sales. My stance continues to be that this year’s low of $1180 is likely to be tested in the coming weeks.

USD/JPY

Talk in the market that the BoJ could be looking at new easing measures could support the pair, however price action is largely going to be dictated by the raft of US data. Traders will be watching for a daily close (09:00 AEDT) below yesterday’s low of 102.23, for the pair to print a bearish daily reversal, which could signal a change in the trend. A close above 102.23 though could signal a buying opportunity given the pullback from overbought levels at 103.38.

AUD/NZD

It’s becoming cheaper and cheaper for Kiwi’s to come over to Australia, with AUD/NZD at 1.1070 at the time of writing. My year-end target was 1.15 and that was when the pair was around 1.25! Currency markets are being driven by yield spreads and central bank policy divergence and AUD/NZD has been one of the macro communities’ favourite trades. At 11:30 AEDT today we get the Australian Q3 GDP and while the consensus is calling for 0.7% on the quarter (range of 1.2% to 0.5%) and 2.6% on the year, we feel there are very modest upside risks here. Still, bounces in this pair should be sold given the very clear and strong trend.

EUR/USD

Despite the raft of US data due on the docket, in Europe there’s plenty to keep traders entertained. In early trade we get the revised services data from Italy, Spain and Germany, while a little later at 21:00 (AEDT) we get the latest GDP read (expected to print 0.1% on the quarter), with retail sales also due. The pair is finding good supply at 1.3627 (the 61.8% retracement of the October to November sell-off) and momentum-based traders will be keen to add to longs on a daily close above this level.

BHP

Price action in BHP is starting to look a little shaky of late and has closed below the August 15 and September 19 pivot highs. The miner has firmly broken out of the sideways pattern it has been in for a few weeks, although a look on the hourly chart suggests the stock looks a little oversold at current levels.

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