Morning View: Rates Narrative Evolving and the USDX

Morning View:
Heading into the May RBA meeting, it’s not all doom and gloom for the Australian economy after all.

Yesterday’s jobs data smashed expectations with better headline numbers on both job’s added and the unemployment rate. There were also upward revisions to February’s numbers which was a nice kicker.

It all sets up the May RBA meeting for another nail biter. And with uncertainty, comes trading opportunity! I’m looking forward to seeing how the Aussie pairs set up heading into May. Keep your eye on our technical analysis section of the Vantage FX News Centre for updated charts and views.

US Housing starts, building permits and jobless claims all fell short of expectations while we also got comments from Fed Vice Chair Stanley Fischer on CNBC who hinted towards a rate rise later rather than sooner.

Although my horns may have been a little shaved, looking at the charts below and the sound of the rhetoric coming out of the Fed, I’m still a USD bull.

On the Calendar Today:
Very quiet on the Australian/Asian data front today. The Australian market will still be digesting yesterday’s Employment numbers and whether the better than expected number actually will take away from the likelihood that the RBA will not cut rates in May. Consensus is that it isn’t likely to, but keep your eye out for any headlines or chatter.

A big Friday night of news from both Europe and North America with one tier 1 release after the other to end the week.

Friday:
GBP Average Earnings Index
GBP Claimant Count Change
GBP Unemployment Rate
CAD Core CPI
CAD Core Retail Sales
USD CPI
USD Core CPI

Chart of the Day:
USDX 4 Hourly:

Click on chart to see a larger view.

It’s always a good idea to be keeping an eye at least on major levels and trends of the USDX when trading any USD pair and although the USDX has come off highs and is heading back to the bottom of it’s range, the chart still looks very bullish to me.

Price is coming back to retest trend line support which coincides with shorter term broken channel resistance now turned support. Even if this level goes, the breakout will push into horizontal range support which should see buyers stepping in.

For me, USD strength isn’t done quite yet.

USDX 1 Minute:

Click on chart to see a larger view.

Just something I wanted to add.

Yesterday’s USDX price action was insane! You never see that type of move in Asia. Price was immediately sold after the open and as it cleared yesterday’s lows stops went off and it was hammered down as you can see from the 1 minute chart above. This of course had a flow on effect to EUR/USD and the other majors, with pairs seeing huge Asian session gains.