Fundamental Analysis:

The U.S dollar lost strength against the Aussie during last weeks trading session to make a fresh lows at 0.80341/ 0.80317 to form a double bottom. This was also supported after Job reports from the U.S economy was published on Friday. The result indicated that the Federal Reserve could keep rates on hold for longer, prompting investors to book profits in the greenback.

The U.S. economy added 252,000 jobs in December the Labor Department said, more than the 240,000 forecast by economists. The unemployment rate ticked down to a six-and-a-half year low 5.6% from 5.8% in November. Economists had forecast a decline to 5.7%.

However, the report showed that average earnings fell by 0.2% in December, missing expectations for a 0.2% increase and were up by only 1.7% from a year earlier.The drop in average earnings prompted investors to take profits in the dollar, as markets pushed back expectations for the first hike in U.S. interest rates to late-2015 from mid-2015 before the report.

This weakened the dollar slightly against most currencies on board and the U.S dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.39% to 92.18 late Friday, off the 12-year peaks of 92.76.



Technical Analysis:

Initial bias is mildly on the upside this week. Break of 0.8214 will bring strong rebound back to 38.2% retracement of 0.8795 to 0.8032 at 0.8323 and we will be looking to sell the rips around these region. On the downside, break of 0.80317 is needed to confirm down trend resumption. Otherwise, we’d expect more consolidative trading first.


In the week ahead, markets will be looking ahead to Wednesday’s report on U.S. retail sales, as well as Friday’s reports on consumer sentiment and consumer price index, for further indications on the strength of the economy. Australian employment data scheduled for Thursday will also be closely-watched.



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