AUDUSD – buoyant labor market helps Aussie
Employment in Australia increased in August by 30,9k, surpassing expectations for a rise of 27,2k and July’s 25k. It is yet another proof of resilience of the Australian economy and the benefits of a brisk recovery in continental Asia that it takes advantage of. The unemployment rate fell to 5,1% and the AUDUSD climbed to the 0,9235 – the highest since early May. The level is not accidental – it’s exactly a 88,6% retracement of a May’s sell-off, when tumbling global markets dragged Aussie lower. The level has already proved as a resistance early August. Should it be conquered the pair will eye 2010 high of 0,9380. The first support is provided by a lower line of an upward channel (currently around 0,8980).
USDCAD – BoC, PMI strengthen Loonie
Bank of Canada increased interested rates for the third time this year which was in line with market expectations. The hike came along with a fairly dovish statement suggesting a longer pause in the moves (interestingly, the BoC policy may be influenced significantly by the conditions on the US labor market). Nevertheless, the CAD gained strongly after the decisions which suggest that some market participants might have speculated on a surprise. No surprise took place and moreover the BoC’s decision was soon justified by a huge improvement in the Ivey PMI (an increase of 11,9 pts. to 65,9 pts – whole 10 massive points above the consensus).
Consequently, the USDCAD returned to the upper line of the wedge it left on August 20th. This line serves as a key support right now, limiting a scope for further CAD appreciation. However, should it be broken, the pair may easily eye a level of 1,01. This interesting technical picture will be once again confronted with the Canadian data. Today we have housing starts (8.15 ET, 14.15 CET, 185k expected) and trade balance (8.30 ET, 14.30 CET, -0,8 bln CAD expected) in the calendar.
Events to watch – claims, trade balance and BoE
Labor market is still in the spotlight so initial claims figure may well be a sentiment shifter today (8.30 ET, 14.30 CET, 470k expected). The figure is released along with the US trade balance (-47,4 bln USD expected) which caused some concerns month ago. Not only the deficit yawned but imports presented an unexpected dynamics. High imports does not fit to a lackluster demand and definitely doesn’t promise anything good for the economy. Observers hope it was just a one-off phenomenon so the figure will be closely monitored. In Europe BoE decides on monetary policy (7.00 ET, 13.00 CET) but no changes are expected. Eventually, one should remember about the Chinese trade balance data due during the Friday’s Asian trade.
