Familiar Pattern

A familiar pattern for AUD/USD, the pair rose to challenge 0.7790 before the rally lost steam and the rate dropped to 0.7730, the rate last changes hands at 0.7772.

• Earlier in the session IHS Markit released February flash PMI, the headline figure dropped to a four month low of 54.4 from 55.9 in Jan, both manufacturing and services dipped. There were bright spots on the report, job creation rose to the strongest pace since 2018.
• Iron ore is higher, recovering the majority of a sharp drop at the start of February, there is some optimism that there will be an uptick of demand from China post-LNY.
• Locally there are media reports that the current coronavirus JobSeeker support will end on March 31 to be replaced by a new permanent increase, the coronavirus JobSeeker will still exist but in a more targeted form.
• From a technical perspective AUD/USD is unchanged and maintains a firm posture despite the recent pullback. Price action on Feb 5 highlighted a reversal signal following the inability to clear the 50-day EMA. The pair has breached resistance at 0.7704, Jan 29 high and this opens 0.7820, Jan 6 high and the bull trigger. On the downside, a break of 0.7564, Feb 2 low would resume recent bearish pressure. Initial support lies at 0.7712, the 20-day EMA.
• On the slate today are preliminary Jan retail sales, the figure is expected to rise 2.0% against a decline of 4.1% in December. CBA's forecast is in line with consensus: "The medium‑term outlook for consumer spending will be supported by a large pool of accrued savings, an improving labour market and lofty levels of consumer sentiment."