EUR/USD
The market has had a relatively stable session after yesterday’s move and now
looks likely to be contained within the range ahead of the Non Farm Payrolls, later
today. Economic highlights have been the successful French and Spanish bond
auctions and the improved ISM numbers from the US. The equity markets have
been relatively stable, with European exchanges down around 0.75%, while in the
US, the S+P is pretty flat. Sarkozy, Merkel and Draghi have all been speaking. Draghi
has been giving the ECB annual report, urging EU nations to implement change in
order to regulate their finances and he noted that negative risks to the EU economy
have increased, with time running out to avoid another credit crunch. Reading
between the lines it would appear that the ECB is leaning towards a rate cut next
week. Sarkozy and Merkel have been towing the same line today and the Euro has
avoided any major calamity. They will meet on Monday and will discuss the
proposition of a new EU treaty, in the hope of avoiding a repeat of the current
situation in the future.
What to make of the charts? The Euro oscillators are mixed. While the hourlies
continue to unwind their overbought status, the 4 hourlies to look as though there
is more room to the topside, with the potential of a flag formation that could see a
quick move towards the 38.2% Fibo level, around 1.3600. Much depends on the
outcome of the NFP though and until then we are unlikely to see a great deal of
action.
For Asia, I would expect a range of 1.3420/1.35 as we await the US numbers. The
strategy looks to be, to buy dips with a tight SL under 1.3400. Even better, I would
tend to stand aside and take a second look once the numbers are released. A poor
number could see a quick move lower towards 1.33, but if yesterdays ADP figure is
anything to go by, we should see at least the expected figure of 125K, with
Unemployment expected – unchanged at 9%
Before then we get the EU PPI figures. Good luck, good w/e.
AUD/USD
The AUD has traded in a choppy manner since the release of the Chinese PMI
numbers yesterday. A low in early Europe of 1.0150 then saw a recovery to
1.0260 before trailing off late in the session, to move between 1.0200/50.
Today looks to be pretty quiet with no domestic data due, and as with
everything else, the market is hanging on for the US Unemployment numbers.
The 4 hour charts are overbought, suggesting the upside is somewhat limited
for now. The dailies are pointing higher though, so if the numbers are good we
are likely to see a rise towards offers that will be seen between
1.0313(100DMA) and 1.0415(200DMA). The downside looks to be pretty well
protected for now at 1.0150 and then at 1.0100.
With US equities closing pretty much flat on the day, I don't think we should
expect too much from the AUD in the coming Australian session. All the action
will take place tonight. Good luck. Good w/e.
