EUR/USD
Italian borrowing costs back above 7%, a French bond auction that resulted in
higher yields and concerns that Hungary may default on its debt all combined to
send the Euro lower, outweighing the fact that the ADP private job sector in the
US expanded by a greater than expected 325K (Exp 182K).
The European banking sector was also once again in the spotlight, with Spanish
Banks reportedly having to write off $50 bio in real Estate losses and Italian
banks struggling to raise capital.
European Equity markets were all lower, with the CAC40 the worst performer,
down 1.5%. The S+P is +0.2%.
Technically the Euro has broken the previous low at 1.2858, currently sitting at
1.2790 and looks likely to head towards the Fibo support at 1.2590. The
oscillators though, are not suggesting that this will be an easy run to the
downside. The daily MACD’s (chart) are slightly oversold and are actually trying
to point higher, so I would be wary of selling it aggressively at these levels
ahead of today’s Non Farm Payroll numbers(exp +150K)
For the time being stay flexible. This remains a market to trade short term
positions rather than one in which one can take a medium term view. Downside
support is at 1.2770, 1.2700 and 1.2590, while the immediate resistance is now
at 1.2860. I would not expect too much action prior to the NFP and would take
direction from this data. There is also plenty of data out of Europe prior to the
NFP, with Retail Sales, Consumer Confidence and Unemployment, none of
which are likely to be particularly positive.
The Eur crosses continue to head lower with EUR/AUD and EUR/JPY particular
beneficiaries. EUR/JPY in particular looks as though there is further room to the
downside
AUD/USD
The 1.0385 resistance held firm yesterday and the US dollar strength has seen
the AUD return to lower levels within the wide range today in line with the drop
off in risk appetite, despite the better than expected US data.
The AUD currently sits at 1.0260 support, mentioned yesterday and will
probably remain around here for the coming session – at least until the NFP
data. If the good ADP data is anything to go by, tonight’s data will be better
than the expected 150k, which would see an improvement in risk sentiment
and therefore, a higher Aud. That remains to be seen.
Ultimately I don't think we are going anywhere very fast for the time being and
1.01/1.04 should continue to cover the range in sessions to come. For today
though look to 1.0230/1.0300 to cover it, with a mild bias to buying the dips.
