Risk appetite improved on Friday night as key US data outperformed expectations. US employment data was released on Friday night showing a strong headline number of 242k non-farm jobs created vs 195k expected, as well as positive revisions for the last two months. This strong performance outweighed concerns over negative average hourly earnings growth and the fact that the majority of new jobs were in minimum wage categories such as healthcare, retail and food service jobs. The AUDUSD pair rose 3 cents or 4.2% last week, ending at 0.7435 the highest level since August last year. The move was driven by a string of better than expected domestic data, risk seeking sentiment returning and US dollar weakness.
China’s National People’s Congress delivered their 13th five year plan on Saturday. The meeting saw the setting of a GDP growth target of 6.5% – 7% for 2016. Fiscal revenue is budgeted to rise 3% with Chinese Premier Li acknowledging that China is facing more and greater difficulties and must be prepared for a tough battle. China is facing a trade-off between support of short-term growth and risk of exacerbating structural problems such as excess leverage and resource miss allocation.
Oil continues to post firm gains as WTI and Brent oil prices rose 3.9% and 4.4% respectively. Recent strength in oil prices are due in-part to continued speculation of production cuts.
Gold posted strong gains on Friday night ahead of the NFP data release. The precious metal hit a high of $1279.66 having retraced to the $1272 level at time of writing. With central banks in Europe and Japan expected to push benchmark interest rates deeper into negative territory, investors are increasingly looking to Gold as a holder of value. With the ECB meeting on Thursday, price volatility in the yellow metal is highly anticipated.
Currency Updates:
EUR/USD Intraday: the upside prevails.
Pivot: 1.0925
Our preference: long positions above 1.0925 with targets @ 1.1070 & 1.1100 in extension.
Alternative scenario: below 1.0925 look for further downside with 1.0890 & 1.0850 as targets.
Comment: the RSI is mixed to bullish.
Supports and resistances:
1.1135 ***
1.1100 **
1.1070 ***
1.0990 Last
1.0925 **
1.0890 ***
1.0850 ***
USD/JPY Intraday: the bias remains bullish.
Pivot: 113.20
Our preference: long positions above 113.20 with targets @ 114.25 & 114.55 in extension.
Alternative scenario: below 113.20 look for further downside with 112.85 & 112.50 as targets.
Comment: the RSI is mixed to bullish.
Supports and resistances:
114.85
114.55
114.25
113.66 Last
113.20
112.85
112.50
GBP/USD Intraday: the upside prevails.
Pivot: 1.4095
Our preference: long positions above 1.4095 with targets @ 1.4255 & 1.4305 in extension.
Alternative scenario: below 1.4095 look for further downside with 1.4020 & 1.3980 as targets.
Comment: the RSI is mixed to bullish.
Supports and resistances:
1.4345 **
1.4305 **
1.4255 ***
1.4219 Last
1.4095 ***
1.4020 ***
1.3980 **
AUD/USD Intraday: the upside prevails.
Pivot: 0.7346
Our preference: long positions above 0.7346 with targets @ 0.7460 & 0.7495 in extension.
Alternative scenario: below 0.7346 look for further downside with 0.7295 & 0.7250 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Supports and resistances:
0.7530
0.7495
0.7460
0.7364 Last
0.7346
0.7295
0.7250
SPI 200 (ASX) (H6) Intraday: the upside prevails.
Pivot: 5075
Our preference: long positions above 5075 with targets @ 5180 & 5200 in extension.
Alternative scenario: below 5075 look for further downside with 5040 & 5005 as targets.
Comment: the RSI is bullish and calls for further upside.
Supports and resistances:
5225
5200
5180
5146 Last
5075
5040
5005
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