EUR/USD
Even by Europe’s standards it was a fast moving day today. Greece having removed
Papandreou, then began the hunt for a new PM, suitable to all sides. They are still looking.
No, they just found one! We’ll find out later today apparently! Italian bond yields continued
to head higher to a high of 6.69%. The ECB was busy buying Italian debt and Berlusconi was rumoured to be on his way out by the end of the day, ahead of today’s vote on the public accounts which saw the Italian Bourse and bond yields rally, only for Berlusconi to deny this and call for another vote of confidence as he clings to power. The stock market and bonds both turned around sharply. We wait to see how this develops. Elsewhere France increased its own austerity measures by announcing spending cuts/tax increases of EUR7bio for 2012 and a further EUR11.3bio in 2013 (and an increase in the retirement age to 62!) Finland’s PM was a big help today by stating that there is significant danger of an EU country defaulting, and that the financial markets are behind the curve as the risk of default has not been priced in. That should provide a level of comfort! Sadly of course he is spot on, given that the entire population of Europe are able to see the writing on the wall, with the unfortunate exception of those in power, who seem frozen and unable to act. 2012 won’t be pretty. We have Spanish elections on 20 November and with unemployment at 22% (44% of under 25’s) there is a whole set of dominoes that are potentially set to fall here as well.
The Euro, for its part, has gyrated around yesterday’s closing levels in Asia. Early action in
Europe headed lower to 1.3680. This turned around, heading to 1.3812, as it looked as
though there may be some progress on removing Berlusconi and then turned around again when it looked like he was staying.
Technically there is not a lot to add to yesterdays view on the EUR. The hourly charts suggest that today’s session will see a continuation of the range and therefore 1.3680/1.3830 should cover it. The 4 hour situation is not much different although the oscillators currently point mildly higher. The market is generally standing aside until the situation looks clearer. I would join them, trading only on a session by session basis, without too specific a view one way or the other. 1.3680/1.3830 for the session.
Today sees the Economic Fin Min meeting and German Trade Balance and Current Account.
AUD/USD
The AUD is pretty much unchanged from yesterday in Asia, having dipped to
1.0275 in Europe as risk positions were lifted amidst the ongoing political
confusion in Greece/Italy. As the Euro recovered later in the session, so did the
AUD, and has remained within the 1.03/1.04 area ever since.
Don't expect too much change today. Sort term resistance at 1.0375/1.0390
and 1.0425 should hamper upside action, while to the downside 1.0315, 1.0290
and 1.0275 will provide support.
Further out the AUD currently look reasonably comfortable in between Fibo
support/resistance at 1.0230/1.0430. If anything the 4 Hour indicators are
suggesting a mild drift higher and a retest of 1.0400/20 would not surprise with
US equities are finishing mildly higher (0.45%)
Today we get the AUD Trade Balance and NAB Business Conditions
