AUD update, Gold price action plus FX Notes

There are 3 important things which should be pinpointed for the AUD/Aussie Dollar outlook:

• Australian Jobs data missed the mark badly on ‘New Jobs’ & Unemployment.

• The China Industrial Production metric released today, was negative.

• Overnight commentary around trade progress was tilted negative.

A mixture of bad results from today’s Aussie jobs data release, pulled AUD/USD back under 68c.

• I maintain my trade call for a Sell AUD/NZD 1.0660 playing the divergence.

• Negative input hitting the AUD compared against the fresh roundof NZD buyers, spurred on by the forward guidance delivered from the RBNZ.

• AUD/NZD nicely in the money and building downside momentum around 1.0630;

 

Gold and Risk Sentiment:

One thing that we did learn from the Fed Testimony overnight was that the US Fed is ready to cut rates again if they “materially need to”, meaning, that we aren’t out of the woods yet

The trade progress is laced with some pessimism, which seems to coincide with the trader headline that the US-China trade talks/Trade deal hit a snag overnight regarding the purchase of US agriculture goods.

China have always maintained that they want the trade tariffs walked back or removed entirely, whereas, the US have been consistently requesting that in exchange – a resumption of buying occurs for the US farm goods.

• This bounce back in Gold CLEARLY seems linked to a softer USD tone, and some worries creeping back in that perhaps aim at concerns that we are further way from the trade deal being inked, compared to what the markets assumed & priced.

Gold now $1,464, forming a possible base above $1,460, for another run up to $1,480.

Meanwhile the Hang Seng (HK50) is getting dumped faster than a grenade with the pin taken out, and that situation also hurts two things:

1. The overall risk sentiment (So Gold can lift on that)

2. The China/HK/US relations could worsen if the US push & provoke regarding China intervening on the HK turmoil (So Gold can lift on the back of that too).

• For those reasons I am cautious about Gold selling right now, and in fact, favour a BUY Gold back to $1,480 Trade play.

 

Recent Trades from Russell:

Hang Seng (HK50)

NZD/USD

USD/JPY

 

What to Watch for FX?

The German GDP is up next, followed closely by the UK Retail sales, US Producer prices, and then the all-important round 2 of the US Fed Testimony.