Originally published by AxiTrader
Short and sweet today as I have to get going to the airport.
The Australian dollar had a fairly tight range over the past 24 hours but it has continued to drift lower after the weaker than expected Caixin Chinese PMI's and another selloff in iron ore soured sentiment to start the week.
At 0.7752 this morning the AUD/USD is looking precariously placed if the NAB business survey doesn't put a more positive tone on the economic outlook for Australia than the one that seems to have seeped into traders psyche as fears about housing, debt, and consumption all congealed into a negative narrative after last weeks surprise 0.6% fall in August retail sales.
As I wrote earlier in Markets Musing a weak NAB business survey would really hurt the Aussie today in a manner that a continuation of the solid results we’ve seen from conditions, trading, profitability, and employment over recent months. Traders will be watching last months fall in confidence to see how that flows and what it suggests about the outlook. I’ll personally be looking to see if NAB chief economist Alan Oster finds anything in the data to either reaffirm or change, his call for rate rises in 2018.
So to rephrase that today's release offers an asymmetric risk to the AUD/USD with a positive outcome likely to find overhead selling and a weak outcome opening the trapdoor toward 77 cents, probably lower.
To recap the previous levels for conditions and confidence were 15 and 5 respectively. Traders often fix on confidence rather than conditions, however. So that is the number to watch.
Looking at the charts and as I suggested yesterday the weekly chart suggests we may see a full round trip to the start of this rally below 74 cents.
On the dailies likewise, the Aussie is starting to fall into the "don't catch a falling knife" category. resistance is 0.7800 and then 0.7830/35 will support is less obvious right now before the 200 day moving average at 0.7665/70 and of course my stretch target of 0.7650/60.
Here's the chart.
Have a great day's trading.