AUD/USD: 0.8222
EUR/USD: 1.1560
Another day, another trend low for the Euro on Friday. This comes ahead of this weeks all-important ECB meeting where Mario Draghi will almost certainly announce that some form of EZ QE is about to get under way, which will be followed by the Greek election, Sunday, where a left wing victory looks to be on the cards.. Elsewhere the Swiss reverberations overshadowed the market and liquidity was somewhat thin ahead of today’s US holiday (MLK day). Gold continues to benefit from the fall-out and stocks recovered from new trend lows to post a strong Friday finish. Today sees little of interest, so it may be quiet in the absence of the US. Japan gets Capacity Utilisation, Industrial Production, Consumer Confidence; Australia, the TD Inflation number and then later the EU sees the C/A figure.
The Aud was choppy but really went nowhere on Friday, regaining its losses to 0.8167, seen after some general US$ strength following the CPI reading, before closing the week at 0.8230. The earlier high had retested 0.8255, where it ran out of steam and drifted lower.
There is a bit of data out most days this week, with the highlights being the China GDP, tomorrow and then the HSBC China flash Mfg PMI, Friday.
The Aud seems to be benefitting from some save-haven demand following the SNB debacle of last week and a near term squeeze to slightly higher levels would not really surprise. That being the case, Friday’s high of 0.8255 will be the first hurdle ahead of the recent minor highs at 0.8273 and 0.8298, with the next Fibo resistance not seen until 0.8321 (38.2% of 0.8795/0.8033). Beyond this, the breakout level from below the base of the long term channel is seen at 0.8350 (weekly chart below) and should be strong resistance – and a decent sell opportunity – if seen.
On the downside, 0.8200 (daily Kijun) and Friday’s 0.8167 low (daily Tenkan) will act as the initial supports. Back below 0.8150 and the 15 Jan low at 0.8132, further bids will arrive at 0.8100, below which would head to the previous lows at 0.8067 and then to the recent trend low of 0.8032 (7 Jan). Below here, downside momentum would look to carry the Aud beneath 0.8000 and on towards the important Fibo level at 0.7944 (61.8% of 0.6006/1.1080), below which we then are headed to the July 2009 low at 0.7700 and beyond, possibly to the RBA’s stated target at 0.7500, albeit not for a while.
For now, it looks set to remain choppy, but possibly with a mild upside bias. Look for 0.8190/0.8270 to cover it today.
Economic data highlights will include:
M: TD Inflation, New Vehicle Sales
T: China GDP, Press Conference, Retail Sales, Urban Investment
W: WBC Consumer Confidence
T: Consumer Inflation Expectation, New Home Sales, China CB Leading Index
F: China HSBC Flash Mfg PMI.
Jim Langlands
FX Charts
www.fxchartsdaily.com
