AUD,NZD

AUD/USD outlook for the week ahead: Risk events looming with retail sales, RBA decision and jobs data.

     This pair is due for a major move and the trifecta of local risk events allied with international risk events like the China HSBC manufacturing PMI as well as the US NFP must surely be enough to finally get this pair moving. I’m still running a small short position as we are so close to the top of the weekly wedge but I am by no means married to this trade. With reserve managers still supposedly buying dips and with AUD/JPY turning bullish, I think we have to be ready for all possibilities. The topside level to watch imho is 105.50ish, and if we break above there then watch out for impulsive bullish moves. The downside level to watch is 1.0280 and the bears really need to break below there to potentially open the floodgates. In the meantime, trade the edges of this range.

  1. last 3 weeks of US weekly payroll numbers were larger than recent history (approaching break even 400k levels). This is indicative of weak monthly NFP number coming (my wild guess: NFP will rise by 50-75k or so). I have no view on Chinese PMI, but if it will surprise on the upside I will try to sell risk in anticipation of weak NFP. Market may shrug it off due to “Sandy effect”, but in my view it should contain any crazy upside potential in pairs like AUD/USD next week.

    1. > One word of caution. Before NFP, Thursday would bring weekly numbers. And that number could look quite rosy after 3 weeks of bad “Sandy” affected data. I doubt any “reasonable (300-400k range)” weekly number affect my negative stance towards monthly, but it could provide some volatility before NFP verdict.

  2. Yen weealness we are seeing affected this pair to go higher. I am bullish about AUDUSD longterm, but JPY got it bottomed, and we could see more action!

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