EUR/USD
Asian markets took the Euro lower on Monday, before flattening out somewhat
during the session. First of all, gloomy weekend Euro news and then the death of
Kim Jung Il that increased the tension in Asia, with little clues as to what happens
next in a leadership vacuum, has pressured markets. It will make a change from
droning on about Greece et al but, with North Koreas’ nuclear capability, a lot of
diplomats will have an uneasy Christmas!
In the meantime Euro concerns continue to dominate, with disappointment from
the outcome of the EU Finance Ministers Conference call, where the word is that
EUR 150 bio of the desired EUR 200 bio has been raised for the purposes of the IMF,
with the UK refusing (surprise!) to donate.
The Euro has not done a lot during the session, having bounced from its Asia low, it
is currently hanging on to 1.3000, so technically there is no change from yesterday.
The hourly charts have completely flattened out, leaving the short term bias neutral
as the 4 hourlies continue to unwind. It may be that we see another push higher but
I would be surprised to see us take out 1.3200 at this stage. In very illiquid markets
though, a short squeeze is always possible. If we were to see the Euro trade up to
this sort of level it would present a selling opportunity for another move lower. The
dailies and the weeklies are both pointing down so any strength should be short
lived.
Support is at 1.2945 (last week’s low), 1.2870 (10 Jan low/ Channel support – see
chart), and then at 1.2600; (76.4% of 1.1870/1.4940). 1.2870 could prove quite
strong and for those who are short, it may be a prudent level to lighten up at
around this level – if seen- before Christmas.
US Stocks are heading into the close down 1.3% which will assist in keeping the
pressure to the downside today.
Later in the session sees the German IFO figures and US Housing Data. Until then it
should be relatively quiet.
AUD/USD
The AUD drifted lower from the open yesterday at 0.9980 to 0.9900 as risk was
generally lifted throughout the session, not helped by the announcement an
uncertainty surrounding the death of Kim Jung Il. Weak Chinese housing data
did not help sentiment either. Since then the market has drifted sideways as we
await today’s RBA minutes of their November meeting.
Today could well see the drift continue. The lack of any real bounce from
yesterday’s lows looks as though it could be a warning of a test of 0.9860 –
15 Dec low. Below here 0.9830, 0.9800 and 0.9775 act as support but should
not be in any imminent danger.
The topside now sees 0.9990, 1.0030 and 1.0060 acting as resistance. These all
look pretty safe today.
It could well be that 0.9900/50 contains the range until the RBA, at which time
it may be the downside that comes under pressure.
US stocks are soft again today with the S+P going into the last 30 minutes
trading down 1.3%, following the general lead earlier, from the EU Indices
(although the CAC40 was flat). This has seen the AUD just break the 0.9900,
trading down to 0.9890. The support at 0.9860 still holds, but keeps an eye on
the downside.
