AUD/USD breaches 0.71 despite positive trade data

AUD/USD through 0.71

Despite an expansion in Australia’s trade surplus and a better than expected print, the Aussie could not gain any benefit as the US dollar continues its upward trek. The trade surplus grew to A$1.6 billion in August, up from A$1.55 billion the previous month and higher than economists’ forecasts of a decline to A$1.4 billion. The improvement came from a rebound in exports which rose 1% after a 1% slump in July. Imports were flat.

Despite the improvement, AUD/USD fell through 0.71 for the first time in three weeks as the US dollar extended yesterday’s surge. The dollar, as measured against a basket of six major currencies, climbed to its highest level since August 17 as US 10-year yields held steady near seven-year highs. The FX pair is currently at 0.7095 and may find some support near the September 11 low of 0.7084.

AUD/USD Daily Chart

Source: Oanda fxTrade

EUR/USD at 6-1/2 week low

As the US dollar soars, so the Euro suffers with yesterday’s news that Italy was adjusting its longer-term deficit-to-GDP ratios lower, quickly forgotten. The FX pair traded down to 1.14625 yesterday, the lowest since August 20 and today has seen the pair extend its current losing streak to a seventh straight day. The pair is currently sitting at 1.1468 with Fibonacci support at 1.1403.

NOTE: The are EUR1.5 billion worth of EUR/USD puts expiring tomorrow at strike of 1.1450

EUR/USD Daily Chart

Source: Oanda fxTrade

World Bank maintains China 2018 GDP growth forecast

The World Bank announced that it was keeping its 2018 GDP growth forecast unchanged at 6.5%. The latest Bloomberg survey of economists shows forecasts of a median estimate of 6.6% growth in 2018, slowing to 6.3% in 2018.

Within the release, the World Bank upped its forecasts for Thailand and Vietnam while trimming those for Indonesia, Malaysia and the Philippines.

No stopping the US dollar runaway train at the moment

Factory orders to affirm strong economy

After the bazooka of the ISM non-manufacturing PMI and the ADP employment report yesterday, the US data calendar calms down a bit today with September Challenger job cuts and August factory orders on tap. Orders are seen rebounding strongly by 2.1% m/m from July’s 0.8% decline, further emphasizing the robust state of the economy. Note that back in August, the new orders index in the ISM manufacturing PMI jumped to 65.1 from 60.2 but fell to 61.8 in September. This could be a sign of what might happen to factory orders next month.

Other items on the data calendar include speeches from Fed’s Quarles (neutral, voter) and ECB’s Coeure while Canada’s Ivey PMI for September completes the deck.

You can view the full MarketPulse data calendar at https://www.marketpulse.com/economic-events/

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