AUD – Australian Dollar
AUD outperformed against most of its major peers as the currency managed to pare losses on the back of yesterday’s GDP (QoQ) miss. AUDUSD rebounded from yesterday’s low of 0.6813, hitting a high of 0.6862 as U.S. negotiators announced that they expect a phase-one deal to be completed before American tariffs rise on December 15.
With AUDUSD currently sitting at 0.6850, key levels of intra-day support to watch are 0.6833 (Daily Fibonacci 23.6%) and 0.6812 (50 & 100-Day Moving Average). Resistance sits at 0.6876 (Daily Fibonacci 50%) and 0.6917 (200-Day Moving Average).
Australia’s Trade Balance and Retail Sales for October are due to be released later this morning. It is expected that the Trade Balance will contract for October to A$6.5 billion, in which the drop-in gold prices over October are likely to lead to a marginally smaller trade surplus from Septembers A$7.5 billion. Meanwhile consensus is expecting Retail Sales to remain subdued at +0.3% MoM. Tonight, we also see the release of Trade Balance, Factory Orders and Initial Jobless Claims data in the U.S.
Trade continues to remain the bottom line for equities, which snapped a 3-day losing streak amid renewed hopes that a deal could be reached by the December 15 deadline. The prevailing media narrative is of constructive negotiations belied by President Trump’s recent remarks that a deal could be postponed till next year. The S&P 500 upside was led by Energy and Financials shares, which were among the biggest laggards over the 3-day selloff this week.
Elsewhere, bonds weakened as risk appetites returned. With risk back on, AUD, CAD & NZD in the FX space shined, with safe haven currency’s JPY and CHF retreating.
Finally, the US Dollar Index continued to drift lower after the ISM services composite fell 0.8 points in November to 53.9, reversing some of October’s 2.1 point increase. The US Dollar Index managed to break its key 200-Day Moving Average support level for only the 5th time this year. The break of the support level now paves the way for a further drop to its next support level of 97.34 (Daily Fibonacci 50%), currently sitting at 97.60.
AUD/USD: 0.6810 – 0.6875 ▲
AUD/EUR: 0.6160 – 0.6205 ▲
GBP/AUD: 1.9040 – 1.9200 ▼
AUD/NZD: 1.0465 – 1.0560 ▲
AUD/CAD: 0.9000 – 0.9085 ▼