AUD/USD, ASX 200 Analysis: Asian Open – 10th July 2023

Market summary

• Whilst Friday’s nonfarm payroll showed ‘only’ 209k jobs added compared to 225k expected and 306k prior, it’s still a healthy number that won’t deter the Fed from hiking further. Especially with unemployment at 3.6%
• Wall Street initially rallied but was unable to hold onto gains, closing slightly lower on Friday
• But the slower jobs number weighed on the US dollar which was the weakest forex major on Friday and second of last week (that title goes to the Canadian dollar)
• Fed fund futures now imply a 93% chance of a Fed hike this month, and for that to be the final hike of the cycle
• A strong employment report for Canada saw USD/CAD form a bearish engulfing day and bearish hammer on the weekly chart
• The Japanese yen continued to broadly strengthen on Friday, sending USD/JPY to a 2-week low just shy of 421, during its worst day in two months (and closing with a bearish engulfing week)
• EUR/USD closed at an 8-day high and now trades less than a days’ average range away from the 1.1012 high
• GBP/USD reached our 1.2800 target outlined last week, and shows the potential to break above the June high and make a run for the 1.30 handle
• USD/CHF accelerated lower after rolling over from 0.90 resistance on Thursday, and shows the potential to probe the YTD low of 0.8820
• WTI crude oil is also rallying which could make the increasingly short speculators question their positioning, with oil now showing the potential to retrace and potentially break above $75

Events in focus (AEDT):

• View The Week Ahead for a look at this week’s economic data and themes
• 09:50 – Japan’s current account, bank lending
• 11:30 – Australian building approvals (revised), business turnover
• 11:30 – China CPI, PPI
• Fed members speak (Daly 00:00, Mester 01:00, Bostic 02:00)

ASX 200 at a glance:

• 92% of the ASX 200 stocks declined on Friday during its worst day for four months
• A bearish engulfing / outside week formed
• Although the market held above 7,000 – a key line of defence for bulls to defend
• SPI 200 futures were 0.36% higher by Friday’s close
• The ASX is expected to open above the June 26^th low today
• Potential for some mean reversion (7100 and 7145 are nearby resistance levels)

AUD/USD 1-hour chart:

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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