EUR/USD
On a day of better data from Europe and the US and in the absence of any
major hiccups from the EU, the Euro has rallied in thin conditions as sentiment
improved in during the course of the session. A better than expected Spanish
bond auction as well as an improved German IFO (116.7 against an expected
116.0) kicked things off, and this was followed up by a good Housing Starts
number from the US (+9.3% 685K).
The DAX and XCAC rose approximately 3% and the US S+P has followed suit to
trade current + 2.90%
All this saw the EUR bounce sharply to 1.3131 (38.2 % of 1.3432/1.2945). It has
since partially retraced some of this, to currently sit at 1.3080. From the look of
the short term charts, we may be in the process of forming the right hand
shoulder of a small head/shoulder top which could well see us back at 1.3000 in
the not too distant future. For the moment, keep an eye on the Fibo resistance
levels at 1.3060/1.3130 to provide the day’s trading parameters. A break either
side looks to provide the next near term direction.
Further out continue to use 1.2945 and 1.3200 as a guide. I don't think we are
going anywhere too far as we head into Christmas, and the best move would be
to stand aside at this stage.
Asia is likely to do very little and there is little Economic news out today.
AUD/USD
The AUD has had a strong session today as it reached a high of 1.0094 in thin
conditions. The improved risk sentiment, in a market that has been caught a bit
short, has helped it along, as have the equities markets that are currently up
3.0%.
The hourly charts are now slightly overbought and further upside could be
limited today. It looks as though 1.0050/1.0100 could cover it in early Asia and
relieved sellers will gather near the top end of this range. We may see the odd
exaggerated spike as we move towards the weekend, but as noted on Sunday, I
don't think that come the close of trade on Friday, we will be too far away from
parity.
Commodities and Equities are all strongly higher today so dips are likely to be
well supported throughout the coming session.
If we do break higher, the points to watch are at 1.0120, 1.0160 & 1.0180. The
downside has support at 1.000, 0.9960 and 0.9930.
Bear in mind that a lot of players are now finished for the year. When they
return after the holidays, levels above parity will look very attractive given the
likelihood of ongoing negative news from Europe.
Today sees the WBC Leading Indicators Index
