Chinese Trade Data

AUDUSD  tumbles as China moves to ban Australian coal imports

China-US trade talks are on focus again today after Donald Trump told reporters at the White House that talks between the two countries were “going very well” and suggested that the 1st March deadline for raising tariffs could be extended. In Tokyo, the Nikkei index gained 0.13 percent to 21,464; the Hang Seng in Hong Kong added 0.41 percent to 28,629 while the Shangai composite finished 0.34 percent lower. Australian stocks rose for the fourth time in five days, with the ASX 200 index lifted by 42pts or 0.7 percent to 6139.2.

The Aussie stock market was pushed higher by gains from the big banks and consumer stocks which have helped keep local equities on track to have the best month since July 2016. Crude oil lost 8 cents to $57.24/barrel while Brent rose 2 cents to $67.10/barrel. USD index shows some strength in the early European session adding 0.11 percent to 96.61. Gold extended the correction from yearly highs and trades around $1334


On the Lookout: Minutes from the Fed’s latest meeting three weeks ago were released yesterday, which revealed that members were keen to end the reduction of bonds on the Fed’s balance sheet before the end of the year.

The minutes of the European Central Bank’s (ECB) January meeting, scheduled for release today is likely to sound dovish, but will likely have a little negative impact on the EUR pairs. Traders expect that the ECB will not be able to hike rates any time.

In the USA at 13:30 GMT, readings were due out on durable goods orders for the month of December, alongside the Philly Fed’s regional manufacturing index for February.

Trading Perspective: The forex markets were dominated by the ongoing Chinese Yuan rally and nervous moves in the Aussie-dollar. The Yuan eased-off 7-month tops against US dollar, having sent the USD/CNY back above the 6.7000 level.

EURUSD: The pair yesterday broke the ten-day trading range that had established between 1.1250-1.30 and moved to two-week highs at 1.1370 in early US session. The rally was short-lived, as the Fed minutes carried a slightly hawkish tilt of several members still believing that the most likely path in rates was still higher if the economy grows as expected. Technically, the pair finds support at the 100-hour moving average at 1.1318, while more solid support can be found at the 200-hour moving average around 1.13. On the upside, the high from yesterday is the first resistance at 1.1370, and extra supply will be found at 1.14 region.

In EUR futures markets, open interest shrunk by nearly 7.9K contracts on Wednesday vs. Tuesday’s final 539,405 contracts, recording the second consecutive drop. Volume, too, dropped by almost 107K contracts, reverting the previous build.

EURUSD Daily Chart

AUDUSD has experienced significant volatility during Asian session initially lifting to 0.7206 following stronger than expected January employment figures only to slump following a change in rate call by Westpac. The Australian bank is anticipating two rate cuts this year, and just to make things worse for the pair, China moved to ban Australian coal imports at its Dalian port. The pair plunged around 120-pips in reaction to the news, to stop at 0.7085 level. Short term technical picture turn negative as the price broke below the hourly moving averages, looking for support at the weekly lows down to 0.7050. Today’s high at 0.7206 has now been established as strong resistance.  


AUDUSD Hourly (H1) Chart