EUR/USD
The overnight news has become increasingly confused and negative from
Europe and it doesn't look as though there will be anything positive - if at all -
coming out of the EU tomorrow, with the possibility of a further delay being
touted around the markets. The cancellation of the Finance Ministers meeting
caused the Euro to spike down to 1.3850, but saw a quick recovery. There is no
apparent deal yet, on a Private Sector write down of Greek debt and no deal
either, on the makeup of the EFSF. To add to the woes, Italy failed to agree on
an austerity package item to raise the pension age and to top it off, the US data
was on the soft side today. Equity markets took the hint and headed lower, with
the S+P closing down 2%.
Despite all this the Euro has held up well when it had every opportunity to head
lower, posing the question as to how short the market really is? Or are the
banks selling assets and repatriating funds ahead of new recapitalization rules?
Technically there is not a whole lot of change from yesterday. Having been
down to 1.3850 and bounced successfully, it remains in place as the first level of
support, followed by a stronger base in the 1.3765/80 area, where trendline/Fibo lines converge. The topside target remains at 1.4005, 61.8% of 1.4545/1.3138. A break here would see a move towards the 200DMA at 1.4116
and then to 1.4210 (76.4% of the same move).
In Asia today I think we should expect further consolidation and 1.3880/1.3960
ought to cover it. Further out, the short term indicators have unwound. The
Euro, has spurned the opportunity to head lower, and may yet do so, however
it appears the market is still caught short and may want to test 1.4000 sooner
rather than later.
AUD/USD
The AUD has taken a breather today confined largely to a 1.04/1.05 range that
looks likely to continue in today’s session, at least until the 3Q CPI figure later
on this morning, where 0.6% is the expectation and will give a guide as to what
to expect from the RBA on Tuesday. Don't expect too much.
The dailies still point higher but much depends on the market view of risk assets
and if today’s move of 1.7% lower in the S+P is a barometer, we are unlikely to
see too much upside today unless the CPI surprises drastically to the upside.
Suspect that 1.0400/1.0470 should cover it early on, with the possibility of a dip
to around 1.0360 later on.
