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Chinese Data Eases Growth Concerns- USD Suffers as Risk Picks Up

Chinese Data Eases Growth Concerns- USD Suffers as Risk Picks Up

Michael Boutros, Strategist

Daily Winners and Losers

Chinese_Data_Eases_Growth_Concerns-_USD_Suffers_as_Risk_Picks_Up_body_Picture_2.png, Chinese Data Eases Growth Concerns- USD Suffers as Risk Picks UpChinese_Data_Eases_Growth_Concerns-_USD_Suffers_as_Risk_Picks_Up_body_Picture_3.png, Chinese Data Eases Growth Concerns- USD Suffers as Risk Picks UpChinese_Data_Eases_Growth_Concerns-_USD_Suffers_as_Risk_Picks_Up_body_Picture_4.png, Chinese Data Eases Growth Concerns- USD Suffers as Risk Picks Up

The Australian dollar is the top performing currency against a weaker greenback in early US trade with an advance of 0.83% on the session. Stronger than expected Chinese data overnight fueled a risk rally that carried over into European trade as growth concerns from the Asian juggernaut temporarily eased. Industrial production, real GDP, and retail sales figures all topped consensus estimates supporting the argument that China has effectively achieved a soft landing. Accordingly, risk has gone back on the offensive with equity markets and higher yielding currencies outperforming across the board.

The AUD/USD pair breached key resistance at the 61.8% Fibonacci extension taken from the December 29th and January 8th troughs at 1.0355 before rebounding off soft resistance at 1.0450. The aussie is likely to remain well supported throughout the US session as markets continue to rally on eased growth concerns. Interim support for the pair rests at 1.0375 backed by the 1.0355, 1.0333, and the 50% extension at 1.0315. Topside resistance now stands at the 76.4% extension at 1.0405 with subsequent ceilings seen at 1.0420 and 1.0450. Overnight traders will be eyeing data out of Australia with the Westpac consumer confidence surveys and new motor vehicle sales on tap.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.0409

100-Day SMA

1.0173

50-Day SMA

1.0124

2011 AUD High

1.1079

Upcoming Events

Date

GMT

Release

Expected

Previous

1/17

23:30

Westpac Consumer Confidence (JAN)

-

-8.3%

1/17

23:30

Westpac Consumer Confidence Index (JAN)

-

94.7

1/18

0:30

New Motor Vehicle Sales (MoM) (DEC)

-

-0.7%

1/18

0:30

New Motor Vehicle Sales (YoY) (DEC)

-

2.9%

Chinese_Data_Eases_Growth_Concerns-_USD_Suffers_as_Risk_Picks_Up_body_Picture_5.png, Chinese Data Eases Growth Concerns- USD Suffers as Risk Picks UpChinese_Data_Eases_Growth_Concerns-_USD_Suffers_as_Risk_Picks_Up_body_Picture_6.png, Chinese Data Eases Growth Concerns- USD Suffers as Risk Picks Up

The Japanese yen is the weakest performing currency ahead of the open with the low yielder falling against all its major counterparts. As risk appetite improves the “haven” currency is likely to remain under pressure as investors jettison the yen in favor of higher yielding, growth linked assets. Against the dollar, the yen is only off by a mere 0.04% as yen losses modestly outpace those of the greenback. Overnight the pair made fresh 2012 lows below 76.60 before quickly pulling back to trade above the 76.80 level. We continue to like this pair higher on risk-on days with interim resistance now eyed at the 23.6% Fibonacci extension taken from the November 18th and January 4th troughs at the 77-figure backed by the 38.2% extension at 77.25 and the 50% extension at 77.45. Support rests at 76.60 with a break below eyeing subsequent floors at 76.40 and 76.15. Again we note that yen advances are likely to remain tempered on intervention concerns as a stronger yen continues to weigh on Japan’s export driven economy. Overnight traders will be eyeing data out of the isle-nation with industrial production and capacity utilization figures on tap.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

78.56

100-Day SMA

77.14

50-Day SMA

77.40

2011 JPY High

75.50

Upcoming Events

Date

GMT

Release

Expected

Previous

1/18

4:30

Industrial Production (MoM) (NOV F)

-

-2.6%

1/18

4:30

Industrial Production (YoY) (NOV F)

-

-4.0%

1/18

4:30

Capacity Utilization (MoM) (NOV F)

-

4.1%

---Written by Michael Boutros, Currency Strategist with DailyFX.com

To contact Michael email mboutros@dailyfx.com or follow him on Twitter @MBForex.

To be added to Michael’s email distribution list, send an email with subject line “Distribution List” to mboutros@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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