AUD/USD Awaiting Employment Data: Breakout or Trend Continuation

The Australian and New Zealand dollars are limiting earlier gains following mixed economic data from China. Australian bonds are rising ahead of a press conference in Beijing, where stimulus measures will be presented later today. Consumption and industrial production in China are growing faster than expected at the start of the year – retail sales are up 4%, and industrial production is rising by 5.9%. However, investors remain cautious, awaiting further stimulus and guidance from senior officials to boost consumption and achieve the government’s economic growth target of around 5% this year.

AUD/USD remains almost unchanged at 0.6325 after reaching 0.6338 during the day. The 100-day moving average continues to exert pressure and is now supported by a downward trend that started from the September peak. A close above 0.6409 (the February 21 peak) is necessary to establish a short-term bottom.

• Intraday resistance: 0.6364 (March 6 peak); weekly resistance: 0.6409 (February 21 peak).
• Intraday support: 0.6234 (March 5 low); weekly support: 0.6187 (March 4 low).

Leverage fund short positions have decreased for the fourth consecutive week to the lowest level since December, while institutional investor short positions have dropped for the first time in a month (CFTC data for the week ending March 11).

Employment data is expected for Thursday – last month, the ABS reported an unusually high number of unemployed people waiting to start work, suggesting a potentially strong employment increase and a low unemployment rate. If this is confirmed, it could strengthen expectations that the RBA will conduct only a moderate easing cycle, which would support the AUD, especially with the risk of USD weakness in the short term.

This week:

• Tuesday: Key speech by Sarah Hunter, Assistant Governor of the RBA (Economics).
• Wednesday: Westpac Leading Index.
• Thursday: February employment report.

NEW ZEALAND

NZD/USD rises by 0.1% to 0.5755 after a 0.9% increase on Friday. The weekly close above the 100-day moving average is a positive signal for the bulls. A close above 0.5773 (February 21 peak) would confirm the ongoing recovery.

• Intraday resistance: 0.5773 (February 21 peak); weekly resistance: 0.5818 (December 12 peak).
• Intraday support: 0.5582 (February 4 low); weekly support: 0.5516 (February 3 low).

Leverage fund short positions have slightly increased, while institutional investor short positions have decreased, according to CFTC (data from March 11).

The Fed’s decision this week is a key event, especially regarding the “dot plot” model forecasts, according to ANZ Bank NZ. Although the Fed may keep the current policy for longer, weak growth and low employment in New Zealand suggest that the RBNZ has enough room for further easing.

This week:

• Tuesday: Foreign bond shares.
• Wednesday: Westpac Consumer Confidence Index and current account as % of GDP.
• Thursday: Q4 GDP.
• Friday: Trade balance.