Intraday Market Update

The U.S. session is experiencing a roller coaster ride, with the majors breaking out higher at the open to then reverse most gains as stocks retreated. Currently, the majors are recouping some of the lost ground as equities are once again edging into positive territory.

The Aussie had the strongest reversal as sellers were already lined up at the 78.6% retracement, 0.9172. We had a short entry from yesterday at the level, but were brought to break even before the strong selling emerged. Although we missed on some gains, it is not a disappointment as prices could have easily rallied further due to key data ahead.

Australian employment figures, the unemployment rate, and the Chinese data could all support the case for more Aussie gains.  I would not recommend selling Aussie at current levels ahead of these key releases. Investors may exit any short positions prior to the news. We would be looking to sell, however, post data announcements — especially if Chinese data is remarkably strong. (Strengthens the view of more China tightening)

The Reserve Bank of New Zealand will likely leave the Official Cash Rate at 2.50% this afternoon and reiterate that a hike may occur around the middle of the year. Any surprise in its statement could also impact the Aussie. If the Bank appears more hawkish than expected, the AUD/NZD could fall further as a view that rate differentials between both countries is shrinking would provide support to the Kiwi.