Chinese data provided a brief boost to the commodity currencies as the HSBC flash manufacturing PMI came in slightly above expectations at 48.3 (exp 47.5); there was no real surprise here at the end of the day as the PMI still showed contraction in the world's second largest economy. Despite this, Australia building approvals m/m were on the rise as they were bumped up to a strong 2.2% (1.0% exp) - a welcome relief compared to last month's -6.9% which caused some worries for the Aussie bulls (if there are many left).
The AUDUSD on the charts has looked relatively upbeat with the positive data today, but for the most part it has been stuck in a very aggressive downtrend. On the D1 this trend can be clearly seen as bearish channel has formed and it's looking very strong after the recent touch looked to act as dynamic support in the market place. With the advent of the channel, and it now confirmed we may see the market look for a cheeky touch before resuming it's downtrend as a number of bears will be waiting for the pullback. Resistance in this case is likely to be found at 0.7190, and we could see some aggressive selling of this level, unless it is mixed with strong Australian economic data; a genuine possibility given the plethora of data coming out this week from Australia.
For the NZDUSD traders playing of today's data things are looking a little more grim, as volatility has so far seemed meagre compared to the previous weeks. I wouldn't count this one just yet though as the data this week from Australia will drag on the NZDUSD, but also there is a number of key data releases further along the week that will play a large role for movements. Despite all of this support at 0.6711 and 0.6651 seem the most likely candidates for aggressive moves in the market, as the bears are still looking to take control.
The S&P 500 is also looking very strong as its bullish run continues on the back of a dovish stance from the FED and Yellen's recent comments as of late. But the sky seems the limits when looking at the charts and the bullish trend seems to be quite strong. However, it failed to crack through resistance at 2103, and many will be questioning if it has the mobility/power to push even higher and test the market ceiling at 2128. This sort of trend is very steep which means it's unlikely to be sustained if it finds itself on the flip side, and the ceiling may be a strong point of selling off if we get a touch and pull back.
Lastly, the market has so far bounced back of the strong drop in oil prices, but I'm more than worried that this is nothing more than a 'dead cat bounce', which would be realistic given that nothing has changed and we are still seeing surpluses in the current market. Further drops are likely to come under pressure when the bears come back into the market, and a push to 43.98 seems more plausible than anything else at this stage, until we get more global economic data.
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