Australian Dollar
0.9735
Following on from the quiet Asia session yesterday, the Aud had a wild ride in Europe running up to 0.9748, apparently on the back of a large buy order in thin conditions, triggering stop losses along the way before the ECB/BOE announcements. It then nosedived to 0.9626 before turning higher again in the Eur/US session after the Central Bank announcements. This saw a general positive attitude to putting risk positions back on the books and the Aud has been a beneficiary, currently trading just below the day’s highs of 0.9767.
Equity markets closed on their highs (S&P up 1.8%) and the CRB finished up 2%. The Aud will benefit from the improved market sentiment – at least while it lasts! It doesn't look as though the current equity rally has yet run out of steam and a possible move to 1200/1220 in the S+P could be on the cards which, if seen, should pull the Aud back towards parity.
Today should see more Asian consolidation and I would be very surprised to see a trade above the downtrend resistance (see chart below), currently at around 0.9790. Equally the downside looks well protected now at 0.9710.
Further out the indicators still look as though they want to go higher and it would appear to me that a period of 0.9600/0.9900 choppy trading may be ahead as the dailies continue to unwind. First direction will come from tonight’s US Employment (Exp Unchanged 9.1%) and NFP data (exp +60k).
In the big picture, as long as we remain under 1.0040, I think we can consider the Aud to be in the greater overall downtrend, but above 1.0040 would cause a reassessment. Have a good w/e
