Mixed U.S. data threaten Santa rally, forex trends

The Australian dollar is the top performer at the open of North American trade on Friday with an advance of 0.28% against the greenback. Markets continued to drift higher ahead of the holiday weekend with European equities modestly higher across the board. Accordingly risk appetite has continued to support the high yielders with the aussie acting as the chief beneficiary of risk-on flows. Mixed US data tempered gains however after personal income and spending both missed consensus estimates with a print of just 0.1% a piece. Durable goods orders were stronger with a print of 3.8%, besting calls for a read of just 2.2%. Look for the “Santa Clause” rally to taper off into the close as European debt concerns come back into focus with Italian 10-year paper approaching the critical 7% mark once again.

The AUD/USD rebounded off interim resistance at 1.0180 in overnight trade after breaking above the 38.2% Fibonacci extension taken from the November 13th and December 8th crests at 1.0115 yesterday. Interim support rests at 1.0140 with a break below eyeing subsequent targets at 1.0115, 1.0090, 1.0060 and the 50% extension at 1.0035. Topside resistance holds at 1.0180 backed by the 23.6% extension at 1.0215 and 1.0250. We continue to favor downside plays in the pair as the aussie continues to track risk sentiment with precision.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

1.0414

50-Day SMA

1.0203

20-Day SMA

1.0171

2011 AUD High

1.1079



The Swiss franc is the weakest performing currency for a third consecutive day against the greenback sliding by 0.13% in early US trade. The USD/CHF continues to straddle the 38.2% Fibonacci extension taken from the 27th and November 30thtroughs at 0.9355 as the swissie struggles to hold its ground. Interim resistance holds at the 0.94-figure with a break here eyeing subsequent ceilings at the 50% extension at 0.9445, the 0.95-handle, and the 61.8% extension at 0.9535. Support rest at 0.9320, followed by 0.9270, and the 23.6% extension at 0.9245. We remain neutral on this pair at these levels and ahead of the Christmas Holiday noting that a break above the 50% extension likely to shift our bias to the topside.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.8749

50-Day SMA

0.9090

20-Day SMA

0.9282

2011 CHF High

0.7079

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
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About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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