Aussie, Kiwi lower on soft data

The lands down under both suffered a sell-off of their currencies in early Asia trading this morning, as economic data failed to impress.

Kiwi hit on jobs data

NZD/USD slumped to near two-week lows after employment data showed jobs growth in the fourth quarter of 2018 expanding at its slowest pace since Q2 2017. Jobs increased by a mere 0.1%, dropping sharply from Q3’s +1.0% and below economists’ expectations of a +0.3% print. The unemployment rate jumped to 4.3%, even as the participation rate eased to 70.9% from a revised 71.0%.

The FX pair fell to the lowest level since January 25 and pushed convincingly though the 200-day moving average support at 0.6766. The next support level could be the 100-day moving average at 0.6727.

NZD/USD Daily Chart

Source: OANDA fxTrade

Antipodes Action Overnight; Don’t Dream It’s Over?

Aussie business confidence at 4-year low

Australia’s National Australia Bank released its Q4 business conditions index this morning and, while the monthly data has had a softer bias of late, the Q4 numbers surprised even more to the downside. Business confidence fell to 1, the lowest since 2015, from 3 in Q3, while the business conditions index fell to 8 from 13 in the third quarter.

Hot on the heels of RBA Governor Lowe’s dovish speech yesterday, the data pressured the Australian dollar further, pushing AUD/USD to its lowest since January 25, with the 200-day moving average at 0.7292 now putting a firm cap on prices, as it has since March 15 last year. There may be a modicum of support around the 0.7076-0.7080 window, with 0.7076 being the January 25 low and 0.7080 the 38.2% Fibonacci retracement of the January rally.

AUD/USD Daily Chart

Source: OANDA fxTrade

Could the BOE spring a surprise?

As my colleague Craig in London pointed out yesterday, there is a small risk that the Bank of England might introduce some market volatility after its rate meeting today.

Are we naively overlooking the BOE meeting this month?

Aside from the BOE, there’s not much to whet our appetites on the data front today. Following on from yesterday’s weak German factory orders for December, we see the industrial production data today, and there is every chance it will paint a similar picture. UK PM May is scheduled to meet Europe’s Juncker, but it would require a dramatic change of stance for anything remarkable to come from that meeting. Speeches from ECB’s Mersch, BOE’s Carney and the Fed’s Clarida complete the day.

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

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