Aussie Edges Higher Ahead of Employment Data
The greenback was on the defensive against most major currencies as stronger than expected economic data created headwinds for the US currency. Tuesday’s better than expected ISM services report in the US failed to give the dollar a lift as investors continue to believe that the US will pursue and easing policy deep into 2014.
Australia reported September trade data with the deficit coming in at 284 million vs. 500 million consensuses. The AUD currency has been volatile on the heels of the expected RBA decision to keep rates steady this week, but the comments clearly showed ongoing concern with the exchange rate being more robust than expected. On Thursday Australia will report October jobs data.
The Euro zone headline purchasing managers index printed at 51.9, with the services subcomponent reported at 51.6, which were both stronger than expected. Euro zone retail sales printed at 0.3% year over year, below expectations for a 0.6% gain. Germany’s final service PMI came in at 52.9, slightly above consensus forecasts, but factory orders jumped 3.3% month over month compared to expectations of a 0.5% reading.
The EU economy has eroded in the fourth quarter and many believe the ECB will take firm action when they meet on Thursday. This could come in the form of an interest rate cut or dovish comments that lead investors to believe there will be a change to the bond purchase program or LTRO.
The AUDUSD edged above resistance which was the 10-day moving average and is poised to potentially test the October highs near 0.9700. Momentum on the currency pair is flattening despite printing in negative territory. The relative strength index has turned higher but is printing near 54 which is in the middle of the neutral range.
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