AUD/USD: 0.8205
EUR/USD: 1.1605
A quiet session, – aside from yesterday’s 8% fall in Chinese equities, – due to the US holiday. Normal service will be resumed today, with the Chinese GDP, R/S and I/P kicking things off in Asia, ahead of the EU/German PPI, ZEW Survey and then the US NAHB Housing Market Index later in the session. Much of the focus though will be on Thursday’s ECB meeting and also on the weekend Greek election result, so it is likely to be a day of position squaring before then. NZ get the Q4 Business Confidence shortly.
The Aud has had a steady, rather quiet session, not too bothered, so far, by the 8% selloff in the Chinese stock market yesterday, although this seems to have been due more to internal Chinese regulatory tightening of the rules for margin traders than due to any economic realities, so there is no real reason for it to have any flow on effect.
For its part, the Aud traded with a mildly heavy bias in drifting back from it 0.8243 high to sit for much of the session close to 0.8200.
We are going to see some action today, with the release of a fair bit of Chinese data, headed by the Q4 GDP, which is expected to show annual growth slowed to 7.2%yy (1.7%qq), thus failing to meet the 7.5 % PBOC target, which could put some downside pressure on the Aud. Also due, will be the R/S (exp +11.7% y/y; Dec) , I/P(exp 7.4% yy) & U/I (exp15.8%yy)). HSBC’s flash China Mfg PMI will be released Friday.
Technically, the dailies still look positive, although the 4 hour charts look mildly negative, so another choppy session could be in store, but with dips possibly presenting a buy opportunity, but dependent largely on the outcome of the China data..
That being the case, below today’s 0.8195 low (daily Kijun 0.8200) would see further bids at Friday’s 0.8167 low (daily Tenkan). Back below 0.8150 and the 15 Jan low at 0.8132, further bids will arrive at 0.8100. Under here would head to the previous lows at 0.8067 and then to the recent trend low of 0.8032 (7 Jan) although this looks unlikely for a while. If wrong, 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.
On the topside, above today’s high would find sellers at Friday’s high of 0.8255, which comes 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 and should be strong resistance – and a decent sell opportunity – if seen.
Economic data highlights will include:
China GDP, Press Conference, Retail Sales, Urban Investment, Industrial Production.
Jim Langlands
FX Charts
www.fxchartsdaily.com
