Kiwi technical view; The Aussie's short-term reprieve

The US dollar remained buoyant overnight alongside moderate gains in US equity markets and perhaps a few hawkish words from a Fed president for good measure. Following on from a solid 2015, the Dollar continues to drive off interest rates and the premise that the Fed will increase 3-4 times in 2016. Fed Richmond President Jeffrey Lacker reiterated his view that the Fed should hike 4 times in 2016. Lacker is not a voting member of the FOMC. Whatever the case, it certainly doesn’t bode well for the antipodean currencies, with the Aussie and Kiwi’s fortunes closely tied to dollar-demand among other dominate directives at the moment, such as China.

According to GO Markets analyst Adam Taylor, bearish prospects around the Kiwi are greater despite today’s reprieve. Certainly the technicals suggest as much. “A double top formed late December last year and since then the price has seen a steep decline. The moving averages are hinting at further bearish momentum and should the downtrend progress, we could see an initial test of 0.6475 with a longer-term target in the region of 0.6300. At the time of writing, key resistance appears to be located at 0.6650.”

Moving on to the Australian dollar, and we’ve seen moderate demand this morning with price action clawing back above 70 US cents. Today’s job vacancies data was also seen to be a good pre-cursor to tomorrow’s official employment stats. According to the Australian Bureau of Statistics, total job vacancies in November 2015 increased by 3.1% from August 2015.

Chinese trade data saw a little jump from the local unit with a surprise jump in exports in December. The trade balance came in at 382bn in Yuan terms, against the 338bn expected. Exports rose 2.3% against an expected fall of -4.1%. Imports declined 4% against -7%.

Although we didn’t see any material move higher from the Aussie, the fact that we’ve seen a moderate bid tone is a good barometer of sentiment out of the region. At the time of writing the Australian dollar is buying 70.4 US cents.