EUR/USD
The Euro has remained surprisingly steady today – unchanged from this time
yesterday – having held the 1.3420 support, it managed to reach a high of
1.3540 in choppy trade. Spain and France both held bond auctions today and it
was not a happy outcome. Spain paid 6.975% for 10 year debt, while France
paid 2.82% for 5 years. Spain has an election on Sunday, with the current
regime looking unlikely to be returned. Elsewhere the argument as to whether
the ECB should act as lender of last resort seems to be gathering momentum,
but Merkel appears rock solid in not allowing that to happen. Both Greece and
Italy are seeing increasing social unrest as the austerity measures are
implemented by the new regimes.
European equity markets didn't enjoy a good session, closing down between
1.1% - 1.8%. US markets have taken the hint where the S+P is down 2% despite
the slightly improved Jobless Claims and increased Building Permits.
Technically, while the Euro holds onto the 1.3420 support the picture remains
fairly neutral within the 1.3420/1.3540 range. Good support is also seen at
1.3405 where the Fibo support and down-trend line meet. Longer term though
the picture remains pretty negative and a break of the support would suggest a
move towards 1.3270.
On the topside a move above 1.3540 would see squeeze towards 1.3560 and
possibly 1.3620.
As far as Asia is concerned, the range looks likely to hold. The short term
indicators are pretty flat and not suggesting much directionally. There is little of
note in economic terms today with only German PPI, EU Consumer Confidence
and US Leading Indicators to provide inspiration. It is Friday though so beware a
late NY inspired move one way or the other…Good luck/Good w/e.
AUD/USD
The AUD has finally broken parity during the session as equity markets begin to
accelerate lower, and the next target of 0.9905-10 is in sight. Base metals also
had a bad day, as Europe slows down, with prices generally 2-4% lower, which
won’t help the Aud in coming sessions.
This move looks as though it could accelerate and the longer term objective
appears to be around 0.9350. Before then though, we need to get below
0.9900. Should we succeed in doing so, then a move towards 0.9700 looks
possible.
On the topside, we need to stay under 1.0300 for the down move to remain
viable. Above here would see a return to further consolidative trading. In the
meantime rallies offer selling opportunities, but in the short term I would be
leaving S/L above 1.0100 area. If we see this level, we could well continue to
make a run higher.
As for Asia,0.9920/1.0020 should cover it, although it is Friday so we may see
some pressure on the Aud as the market cuts out risk positions ahead of the
weekend. Last week’s NY Friday afternoon squeeze took out a market that was
caught short. I am not sure that is the case this week, and think it unlikely we
will see a similar move, unless Europe solves all their problems!!
