Aussie back within range - US GDP to have final say

The Aussie goes into tonight's 'Nylon' session firmly on the back foot where US GDP gets the final say for the week.

Wednesday's 4-week high required three data sets to break it above 0.748 resistance. The fact it toppled over on the back of US inflation data last night to crash below 0.748 and within the previous range should act as start reminder of who is in control of the Aussie at present.

Closing the session with a Bearish Engulfing Candle and below the previous sesison's breakout level, it starts today’s session on the back foot. The intraday price action clings onto a mildly bullish channel but I suspect that if we do see any bullish rallies within it, it will merely serve as a better price for traders to go short on. 0.748 is an obvious level to consider selling into (assuming we get that far) but 0.783 may well suffice as resistance for the 'nylon' session (New York - London).

The focal point for traders will be Q4 GDP from the US which is widely expected to have been revised down to 2.1% from 2.6%. This leaves the Aussie open to further selling if GDP is not as bad as traders feared. If it is lowered to around 2.1% then we could see an upside move towards 0.783 but I doubt we will close back above here this week.

Next week could really stir the pot for Aussie crosses. The focus will shift to RBA's rate decision on Tuesday where the market remains equally divided over whether they'll cut rates or not. (So not much different to last month really...) Thursday provides a decent data dump domestically with GDP, Retail Sales and Trade balance all released simultaneously. Overseas we have Chinese final PMI along with US Trade balance and Nonfarm employment data. So we have a plethora of data to get things moving but at this stage the downside appears more prominent for the Aussie in my humble opinion.

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