AUDUSD posts largest pip move of the week

The US Dollar was bearish against most of its major pairs on Friday with the exception of the AUD and CHF.

On Monday, no major economic data is expected to be released.

The Euro was bullish against most of its major pairs with the exception of the NZD and CAD. In Europe, Brexit talks made no progress as European Union negotiators called on the U.K. side to negotiate further. European leaders consider U.K. Prime Minister Boris Johnson threat to abandon Brexit talks today is a bluff. The European Commission has posted final readings of September CPI at -0.3% on year, as expected, and August trade balance at 21.9 billion euros surplus (vs 18 billion euros surplus expected).

The Australian dollar was bearish against all of its major pairs.

On last week's U.S. economic data front:

Retail Sales Advance jumped 1.9% on month in September (+0.8% expected), compared to +0.6% in August.

Industrial Production unexpectedly fell 0.6% on month in September (+0.5% expected), compared to +0.4% in August.

The University of Michigan's Consumer Sentiment Index increased to 81.2 on month in the October preliminary reading (80.5 expected), from 80.4 in the September final reading.

The Monthly Budget Deficit contracted to 124.6 billion dollars on month in September (-124.0 billion dollars expected), from 200.1 billion dollars in August.

The Empire Manufacturing index dropped to 10.5 on month in October (14.0 expected), from 17.0 in September.

Initial Jobless Claims unexpectedly increased to 898K for the week ending October 10th (825K expected), from a revised 845K in the week before. Continuing Claims declined to 10,018K for the week ending October 3rd (10,550K expected), from a revised 11,183K in the previous week.

The Mortgage Bankers Association's Mortgage Applications slipped 0.7% for the week ending October 9th, compared to +4.6% in the prior week.

The Producer Price Index Final Demand increased 0.4% on month in September (+0.2% expected), compared to +0.3% in August.

The National Federation of Independent Business's Small Business Optimism Index jumped to 104.0 on month in September (100.9 expected), from 100.2 in August.

Finally, the Consumer Price Index increased 0.2% on month in September (as expected), compared to +0.4% in August.

The AUDUSD dropped over 2.17% (-157 pips) on the week making it the largest mover of the week. Looking at the chart, a continuation lower looks likely after a bearish cross was validated when the 20-day moving average (red) crossed below the 50-day moving average (blue). A bearish trend channel is taking shape. Key resistance can be seen at the 0.725 area with a preference to the downside to reach 0.7025 support and ultimately 0.692 in extension.

Source: GAIN Capital, TradingView

Happy Trading.

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