EUR/USD
The markets stabilised somewhat today, following the announcement of the Greek
referendum to be held on the EU bailout fund. Merkel, Sarkozy, the IMF and ECB are
currently meeting with Papandreou at today’s G20 to ensure that he understands that
there will be no more funds forthcoming unless the vote is positive and that the
austerity measures are carried out in full. It should be an interesting chat! As
Papandreou faces a confidence vote in the Greek parliament on Friday, with a current
majority of 2, he may well not be around to see it through if an election is called…Any
way we wait and see …
Elsewhere the FOMC has taken place, where in short, there was no change in rates, no
QE3 was mentioned, the current slow pace of growth was much as expected, the rate of
unemployment will be slow to ease, and the major downside risks come from the
situation in Europe. In other words, no major surprises, although equity markets closed
higher noting the Feds comments on economic growth, albeit anaemic.
Technically the Euro has had a choppy session without really going anywhere too far.
Having been mildly bid through most of Europe, it eventually reached a high of 1.3828
before dipping back to 1.3708 as the FOMC left rates unchanged and has hung around
in the 1.3730/00 pretty much ever since. Equities are a bit higher today which has
assisted in stabilising things and it looks as though, for the coming session
1.3700/1.3820 should cover it. The 4 hourly charts are still recovering from their recent
move lower and it appears that dips in the short term should meet reasonable demand.
Having said that, a squeeze above today’s highs would see some selling interest, with
1.3850 being 38.2% of the move from1.4250/1.3605.
The dailies are still pointing lower, so should we see a short term break above 1.3850,
the next level where sellers will congregate should be around 1.3870 and then 1.3920.
Downside targets are to be found at 1.3605 and beneath here at 1.3565
Today’s major economic data comes from the EU services PMI figures, followed by the
ECB rate decision and press conference, so it looks like a range trade until then. Given
the slowing EU economy a cut would not surprise. Elsewhere slightly improved ADP
figures today may herald a better NFP number tomorrow – wait and see – good luck!
AUD/USD
The AUD, having seen a 1.0280 low in Australia yesterday, spent the balance of
the session squeezing up, seeing a high in Europe of 1.0426, before trailing off
again to around current levels. All in all a pretty quiet session bearing in mind
the potential for volatility, with the EU debacle and the FOMC driving markets.
Equity markets have held up today, which has helped stabilise things and the S+
P closed up 1.6%.
Looking ahead, it appears that we need to hold 1.0250. If we don't, then the
potential for a quick move back to parity and possibly 0.9800 looks to be on the
cards.
On the topside, 1.0430 continues to act as short term resistance and a move
above here would stabilise the situation somewhat, with some medium term
consolidation in the 1.03/1.07 range.
The way the dailies are working out, I would tend to be looking for rallies to sell
into and looking for the move lower. Europe has the ability to constantly
conjure up new disasters and the AUD will react accordingly to any unexpected
news headline, so the risk/reward appears to point lower, but be flexible.
Today sees retail sales
