Aussie tumbles on weak Australian GDP

USD/JPY opened the Asian session at 119.21 after pushing higher due to broad USD strength resulting from higher US yields and a hawkish turn in Fed expectations. The USD/JPY idled for the first hour of Asian trading amid talk of Japanese exporter selling at 119.30. The USD/JPY traded at 119.14 before fresh buying emerged and took out the sellers at 119.30. The pairing traded to a fresh 7-year high at 119.44 before settling around 119.40 heading into the afternoon session. The market is decidedly bullish towards the USD/JPY, as comments from key Fed officials suggest the falling energy prices won’t necessarily cause the Fed to hesitate in commencing the tightening cycle. The rise in US yields will underpin the USD/JPY heading into the US non-farm payroll data on Friday and a solid result should see the 120.00 level tested or break. US ADP payroll data and non-manufacturing ISM will be out later today.

EUR/USD opened the Asian session at 1.2383 after falling during the US session when US yields pushed higher due to a hawkish turn in Fed expectations. Once gain the Asian session ignored the EUR/USD – with the action focused on the AUD/USD – which fell to a fresh 4-year and USD/JPY – which traded to a fresh 7-year high. The EUR/USD sat on the sidelines and traded in a 1.2381/90 range through the morning session.

Sentiment towards he EUR/USD remains bearish, but the market is short and there might be some hesitation to extend the price action in either direction ahead of the ECB meeting on Thursday and US non-farm payroll data on Friday. EZ Services PMI and Retail Sales is out later today followed by US non-mfg ISM and ADP US job numbers. Support has formed ahead of 1.2355 with stops below 1.2350 while solid resistance and sell orders are camped ahead of 1.2500.

AUD/USD opened on Wednesday at 0.8447 and traded a 0.8392-0.8470 range in Asia; last at 0.8400. AUD/USD was content to trade a 0.8445-70 range prior to the GDP data in lacklustre fashion after having closed in NY down 0.7% in a very pro US Dollar environment Tuesday night. AUD/USD traded 0.8458 just prior to the GDP and dropped like a stone on much worse than expected numbers Year on year GDP came in at 2.7% down from a forecasted 3.1% reading. AUD/USD baulked at the previous four year low at 0.8417 but sellers kept stepping up to the plate and AUD/USD tumbled through 0.8400 tripping stops to 0.8392 before light profit taking took hold. The bounce off the low so far has been anaemic with AUD/USD seemingly primed to take the next step lower when the European session gets underway. AUD is down across the board – minus 0.5% against GBP, EUR and CAD. As we head deeper into yearend US Dollar bulls are in full flight and won’t be denied. The local interest rate market has now built in 23bps worth of easing over the next 12 months.

The post Aussie tumbles on weak Australian GDP appeared first on Forex Circles.

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