Overnight roundup: USD fell on US government shutdown worries. The AUD and NZD recovered from Asia losses and extends the rally to 0.80 and 0.73.

Data review:

US Dec Building Permits 1.302M vs 1.303M previous

US Dec Housing Starts 1.192M vs 1.297M previous

Initial claims was 220,000, a decrease of 41,000 from the previous week

Philadelphia December manufacturing activity down to 22.2

What’s on today?

No major economic event due except UK Retail sales

AUDUSD: Retraced after December local labor data and rebound to 0.80 after China Q4 GDP data. Last week we forecast 0.80 after Retail sales data (Jan 11) this week the cross made a high at 0.8020. Today’s view is neutral. Weekly resistance seems between 0.8030-0.8065.  Support finds at 0.7970 and 0.7935.

NZDUSD: The kiwi bird is facing resistance at 0.7330 it’s 50WMA above this a parallel resistance zone seems between 0.7350-0.7375. Support finds at0.7270 and 0.7220.

AUDNZD: The cross managed to hold the 200DMA last Friday and has changed the direction to the North. Today in Asia session the price made a high at 1.0985 facing resistance at 1.0992 it’s 50MA above this 1.1001 it’s 100MA exists. Support finds at 1.0920 while holding the bulls try to step above the descending trendline (below chart). The daily and oscillator remain bullish.

Also read: AUDJPY chart setup

We are focusing on Sunday’s vote in Germany and NAFTA next round of negotiations. FX to watch are EURUSD, USDCAD, and USDMXN.

This Sunday (Jan 21) the SPD party delegates will vote whether or not to start official coalition talks with Markel’s CDU/CSU, CS reported.  We twice advised to take profit at 1.22 and again at 1.23. We are waiting for a dip to buy EURUSD again on a risk-reward basis.

The Bank of Canada maintained a cautious tone, helped the USDCAD to hold the support (Jan 05 low) in line with our expectations. The CAD was weakened after the BoC announcement but USDCAD gains were wiped off with a limited change in the BoC’s tone. We repeatedly advised buying USDCAD into BoC and a dip buyer into next week’s next round of NAFTA negotiations. We retain to our long USDCAD trade.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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