The Australian dollar bounced 100 pips from the day’s low after FOMC Member Bullard concerns over inflation of lower oil prices closed near 3-days high.

As of now this week, the AUD was supported by China Trade numbers later Aussie jobs data currently trading on marginal gains.

“The Australian dollar is the liquid China economic proxy, and unlike shorting local Chinese assets or currency, you don’t get whipsawed by policy intervention,” Mr James Purcell, a cross-asset strategist at UBS Group’s wealth-management business in Hong Kong, was reported as saying by Bloomberg

“The Australian economy is still very much tied to the resource sector, so if we have worries about China, its demand for resources, the Aussie dollar will be impacted,” said Mr Song Seng Wun, economist at CIMB Private Banking, was reported by Today online.

“A high Australian dollar has been particularly challenging for manufacturing businesses, so the currency depreciation over the last 12 months has certainly been a very welcome relief,” Viva chief executive Scott Wyatt told the Australian Financial Review yesterday.

Next week’s events: Jan 17th– Jan 23rd

Monday China: GDP,

Industrial Production,

Fixed asset investment,

NBS Press conference

Bank holiday –low liquidity
Tuesday Westpac consumer sentiment NAHB housing market index
Wednesday MI inflation expectations Building Permits

CPI /m

Housing starts

Thursday   Philly Fed Manufacturing Index

Unemployment Claims

Friday   Flash Manufacturing PMI

Existing Home Sales

The next week starts with China GDP scheduled on Tuesday at 10 a.m. Beijing time.

China is expected to post its weakest economic growth since the global financial crisis in the fourth quarter, adding pressure on policymakers to take more steps to ward off a sharper slowdown that could jolt global markets, reported by Bloomberg.

“The weaknesses in both domestic and external demand have exacerbated the deflationary pressures in the economy,” economists Qu Hongbin and Julia Wang at HSBC said in a note.

As we forecast in out yesterday’s article, the cross bounce from the make/break level dot to dot jumps 95 pips.

Trading resistance seems at 0.7000, 0.7040 and  0.7080

Support finds at 0.6950, 0.6920 and 0.6900

Fresh buying available only above 0.7000 few pips higher and selling opens below 0.6950 few pips lower.

What’s on today?

Retail sales, core retail sales, Empire State Manufacturing Index, FOMC Member Dudley Speaks, Capacity Utilization Rate and Industrial Production m/m. Finally the week close with Prelim UoM Consumer Sentiment.