By: Alex Brandt
Asian Session Highlights:
AUD/USD and NZD/USD appreciate for the tenth day in a row.
GBP/USD lags behind waiting on BoE decision.
EUR/USD weakens but finds support at 1.4350
USD/CHF fails to break 4H bearish trend line resistance
Events on Tap
Germany Retail Sales - Market Expectation @ .30% increase
Swiss Franc CPI - Market Expectation @ 0.0% increase
With positive economic reports coming from New Zealand showing the trade deficit declining more then market expectations, boosted traders confidence that a strong New Zealand dollar was not severely impacting the New Zealand economy as previously thought. The NZD/USD rose 50 pips to a 50 day high of .7430 and has found temporary support at .7350. The Australian trade deficit also declined to $1.7B from $1.8B promptly driving the AUD/USD up 60 pips to a 30 day high of .9261. The AUD/USD has found temporary support at .9180. I expect that with stronger economic reports from Australia, the carry trade will be in full force over the coming months. Especially with the US Central Bank divided over its current monetary policy about when and how to remove its excessive stimulus measures. I do not expect the US Central Bank to raise rates til mid 2010 at the earliest.
US Dollar and NFP Report
Given this past week in which we have witnessed positive US economic data fuel risk appetite, if the NFP beats market expectations I would expect the dollar to decline. Last month we saw the market change in which positive US economic data, fueled the dollar. Some traders are expecting the same to happen again, however the new orders and export orders components decreased along with inventory sentiment which suggests that the pace of improvement in the U.S. economy could be slowing.