AUD/USD showing buying pressure

Four markets in focus today: AUD/USD, Spot Gold, Sydney Airports and Westpac.


AUD/USD printed a bullish candle on Friday, showing huge buying pressure off the 92 handle. Clearly the market wasn’t overly impressed by the US payrolls on Friday and while the headline number was strong the lack of earnings growth highlighted that it’s going to be sometime until inflation starts heading higher. I suggested working bids into 1.4910 on EUR/AUD last week and still feel this looks like a good way to express a bearish view on AUD, with the pair now up 40 pips from my suggested entry point. On AUD/USD, 0.9302 seems key level in the short term. This level represents the downtrend from the recent high of 0.9461, but also the 38.2% retracement of the 0.9461 to 0.9203. A break here could see a quick squeeze to 0.9362. On the billing today we have service sector data, TD securities inflation gauge building approvals (11:30 AEST) and ANZ jobs ads. I am not sure any of these data points will have a huge bearing on sentiment given the RBA statement tomorrow, ahead of the upcoming budget.

Spot Gold

In play tonight we get the US service sector ISM report and the market expects the trend of improved US data to continue, with the index expected to print 54 (from 53.1 in March). Gold looks like it could rebound somewhat this week and the bulls will be keen to point out the clear support seen on gold around the 200-day moving average at $1283, with the commodity failing to close below this average despite numerous tests. Gold seems to be holding up despite an improvement in US data, so it’s unclear how price will be affected on a strong services ISM report. It’s worth bearing in mind that Janet Yellen speaks on Wednesday night (midnight). Traders will continue to watch developments in the Ukraine with great interest as well, although increased tensions have failed to put a strong bid in gold of late.

Sydney Airports (SYD)

SYD looks really bullish on the daily chart right now and if long stay so, as price action looks extremely favourable for more short term gains. In fact if I run a scan for stocks in the ASX 200 that closed on Friday at a thirty day high, above the top band of the Bollinger band and with the MACD above the signal line this is the only one that comes up on my scan. Friday’s breakout of the recent consolidation is clearly bullish; however it would have been nice to see a little bit more volume accompany this. SYD should be on every momentum trader’s radar right now.

Westpac (WBC)

WBC announced cash earnings of A$3.77 billion along with a dividend of 90 cents.

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