The USD will be in focus tomorrow as it's a key test of strength with the upcoming non-farm payroll data on the US economy. So far the markets are expecting a solid figure to be produced at 190K (164K prev), which would be a solid result given the drop last month. One of the key figures will also be manufacturing data which has come under scrutiny as of late, given the tariffs that have tried to be applied by the US on major trade partners when it comes to commodities such as steel and aluminium. All in all though, the US economy is set for a wild ride and markets will be keenly watching it to see what happens next given that another rate rise is expected next month, and is so far locked in by the markets.
For me one of the key markets to watch will be the USDJPY which for a long time has suffered against the JPY but has clawed back some ground in recent weeks. This rise has been on the back of markets become more risk focused and looking to leave safe havens. However, it has come up against some resistance as the market is struggling to break through resistance now at 108.768 on the chart. If we see some positive data then expect it to punch through this level and rise potentially to resistance at 111.083 in the long run. If the bears take control and swipe strongly then support at 107.795 is likely to be key in this scenario.
One of the key movers this evening so far has been the Australian dollar as data was positive with manufacturing lifting to 57.5, even though it was below the expected 58.3 by the market. This still shows solid expansion in the Australian economy and is a positive in a sea of red recently, as Australian data has been hit and miss, and many are expecting any future rate rises to be some time off as a result. Given the recent data though the Reserve Bank of Australia will be bullish on the prospect of the AUD but will be hoping that it slips lower to help support the export and manufacturing sector.
Looking at the AUDUSD on the charts it's clear to see that so far it has managed to claw back some very solid ground against the USD. However it has faltered at resistance at 0.7588 on the charts as markets still don't believe there is large upside potential here. This can be further viewed from the weekly chart which shows a declining bearish market in the long run if looked at closely. If the AUDUSD does fall further I expect support at 0.7527 and 0.7472 on the charts, but it will be very tight unless we see some strong USD strength in the interim.
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