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AETOS Market Commentary 04/03/2019

AETOS Capital Group Partnership


The Aussie fell on Friday, closing at 0.7079(-21 pips) against the greenback. The Aussie opened at 0.7102 today(Monday) as continued optimism towards trade negotiations between the US and China along with attempts from US President Donald Trump to bring the greenback lower, appear to be the main catalysts behind the sudden lift in thin trade.

After closing last week at .7080, the AUD/USD currently trades at 0.7110, helped by a report from The Wall Street Journal suggesting that the US and China are close to agreeing a trade deal with a formal agreement likely be reached at a Xi-Trump summit scheduled for around March 27.“The news should be a positive for risk sentiment at the start of the new week,” said Rodrigo Catril, Senior FX Strategist at the National Australia Bank. While seemingly good news, similar reports have been heard before, an outcome that has seen financial markets largely price in an amicable agreement arriving between the two sides. The timing of the story is also impeccable, arriving in early Asian trade when very little volumes can lead to large price movements. Turning to the session ahead, the economic data calendar is busy in Australia with the release of further Q4 GDP inputs, along with building approvals data for January, at 11.30am AEDT. For the Q4 business indicators release, operating profits are expected to lift by 3% for the quarter, primarily reflecting the impact of stronger commodity prices for mining firms. Business inventories are also expected to edge up by 0.3%, an outcome that will add around 0.1 percentage points to quarterly GDP growth on an expenditure basis. Within the indicators report, measures on employee compensation will also be closely watched given increased uncertainty over the outlook for Australian household spending.

Separately, the ABS will also release Australia’s building approvals report for January alongside the business indicators report. After tumbling in the prior two months, a small increase of 1.5% is expected. The latest Australian inflation gauge from the Melbourne Institute will also be of interest when released at 11am AEDT, as will ANZ job ads for February at 11.30am AEDT.

AUDUSD Daily Chart

Based on the daily chart above, the outlook for the pair remains the same as the pair is struggled to bypass its 20SMA(Red line) on Friday, providing first level of resistance at 0.7118.


The Euro weakened on Friday as well, closing at 1.1363(-9 pips) against the greenback. The Eurozone data continues representing a slowing of economic growth. The final versions of Markit Manufacturing PMI came slightly better-than-expected for the EU, although confirming the economic downturn as German's index was confirmed at 47.6, while, for the whole Union, the index resulted at 49.3, slipping into contraction territory for the first time since June 2013. Also, and according to preliminary estimates, EU's inflation surged as expected to 1.5% YoY, although the core reading decreased to 1.0%. On a brighter note, German's unemployment decreased sharply, falling short, however, from generating EUR's demand. US data was not much better, as the Markit Manufacturing PMI was revised lower in February to 53.0, while the Michigan Consumer Sentiment Index came in at 93.8. Nevertheless, the American currency changed course as Wall Street opened with solid gains and US Treasury yields soared to their highest in over a month.

EURUSD Daily Chart

In the chart above, the pair tried and failed to surpass the 1.1400 level multiple times this last week. The daily chart shows that selling interest rejected advances around the 61.8% retracement of the latest daily decline measured between 1.1513 and 1.1233 at 1.1410, a strong static support level. In the same chart, the pair keeps developing above a bearish 20 SMA(green line), while an also bearish 100 SMA(Red Line) caps the upside around 1.1385, while technical indicators barely hold within positive ground, all of which reflects the limited buying interest around the pair

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Source: https://www.aetoscg.com/uk/market-commentary
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