EUR/USD
Confidence in last week’s changes in the EU treaty has well and truly worn off and
the ability of various “sign-up” nations to hold up their end of the bargain is now in
serious doubt. Threats of France being downgraded and a rush into safe haven US
Treasuries have seen yet another sell-off in the Euro, which has finally broken
1.3000. Italy ‘s 5 year bond auction returned a yield of 6.47%, which while better
than recent sales, is not at a rate that is sustainable in the long term. European
stocks had a bad day with the CAC40 leading the way (-3.33%), and the DAX not far
behind (-1.72%). Gold (-$60oz) and Oil (-$5pb) have had a very tough session and
the S+P has closed down 1.1 %. The DXY has soared to as high as 80.73 while the
CRB has broken 300.
The Euro decline is accelerating with an overnight low of 1.2945, and although it
has had a minor bounce it has so far been unable to regain1.3000 at the time of
writing and does not look happy at all.
Technically, as can be seen, we are now within touching distance of the Dec 2010
lows of 1.2870. Below here the 76.4% Fibo support level is to be found at 1.2600.
This is a little way off at present but bounces from here would seem to offer selling
opportunities as we head towards this target.
Minor resistance is now at 1.3050. Above here 1.3145 and 1.3250 should contain
bounces. Above 1.3300 would mean a return to more consolidative conditions.
While the short term indicators are very oversold and indicate the potential for a
bounce, the longer term indicators continue to point to lower levels.
Today in Asia I would be looking to 1.2950/1.3020 as a guide with a view to selling
into strength. There is a lot of data out later, including EU Monthly report and then
PMI numbers, Unemployment and CPI, while form the US we see Industrial
production, PPI, Capacity Utilisation and the NY State and Philly Mfg Index. We also
see data from China (HSBC Mfg PMI), so there is plenty of opportunity for volatility.
Tread carefully!
AUD/USD
The AUD has been hit hard in the latest session as equities and commodities
took a beating. The CRB has collapsed to 296 with the likes of Silver -8%, Gold -
5% and most others not far behind. Risk assets have been cut heavily, with the
main beneficiary being US Treasuries, which continue to act as a perceived safe
haven.
Having finished yesterday’s Asian session at parity, the AUD has been to an
overnight low of 0.9883 and is finding bounces difficult to come by. The next
downside target is 0.9835 (76.4% of 0.9660/1.0380). Beyond here the 0.9660
low of 2 weeks ago will attract.
Resistance today will be at 0.9940 and above here at 1.0020, both of which are
Fibo levels. Bounces look as though they will merely provide selling
opportunities as the longer term oscillators point increasingly lower.
Watch the Chinese Data today to provide direction. Soft figures will continue to
weigh on the AUD
