CABLE PAUSES AS TRADERS WAIT FOR EMPLOYMENT AND INFLATION DATA
In the past five days, the Australian dollar has lost almost a percentage point against the U.S. dollar. The downward streak is continuing after the Australian Bureau of Statistics released wage growth numbers. According to the organization, the last quarter’s wage price increased by 0.6%, which is higher than the 0.5% expected by traders. However, the annualized growth rate of 2.1% missed the 2.2% forecast by analysts. The AUD/USD pair is now trading at 0.7857, which is 30 basis points lower. Later today, the pair will likely be influenced by the data that comes from the United States including the existing home sales and PMIs.
The EUR/USD pair is little changed as traders wait for important economic data from the European Union and the United States. In the early hours, we will get the manufacturing and services PMI data from Germany. Traders expect the manufacturing activity in Germany to slow to 60.6, down from 61.1 reported in the previous month. They also expect the services activity to slow to 57 from last month’s 57.3. In the afternoon, the same data will be released in the U.S where traders expect manufacturing PMI to slow to 55.4 compared to last month’s 55.5. They expect the services PMI to move up from 53.3 to 54.0. The biggest news of the day will be the FOMC minutes which will give us a better direction of the Fed.
The cable is also little changed as traders wait for major wages and inflation-related data from the UK. In the morning hours, the ONS will release the wage growth numbers. Traders expect the average hourly wage growth without bonuses to remain unchanged at 2.4%. Wages with bonuses are also expected to remain unchanged at 2.5% while the claimant count is expected to fall to 4.1K. In the afternoon, BoE officials will address legislators on inflation.
Challenging economic data from Australia, coupled with a strengthening dollar have made it difficult for the AUD/USD pair to continue its upward trend. Today, the pair continued its downward movement following the release of wage growth numbers. The next price target for the pair is likely 1.7802, which is the 11.40% Fibonacci Retracement level. However, this will be mostly determined by the data from the US later today.
The strong dollar, caused partly by higher U.S treasury yields pushed the EUR/USD pair lower. Indicators imply that the pair could continue the downward trend. As shown below the, arrangement of the long and short term moving averages indicate that the pair could continue moving down. The pair is now at an important Fibonacci Retracement level of 61.8% and there is a likelihood that it might drop to the 70.70% level at 1.2307.
The cable is at an inflection point. In the past one week, it has fallen from a high of 1.4145 and dropped to a low of 1.3931. As shown below, the pair’s symmetrical triangle pattern is almost over as traders wait for the employment and inflation data to be released today. At this point, since the data could go either way, traders should take a wait and see attitude.