AUD/USD: 0.7915
EUR/USD: 1.2660
An early sell-off in the Euro has been reversed, on the back of some profit taking following the result of the Greek election, with focus now turning towards Wednesday’s FOMC Meeting. Ahead of that, today’s action will come care of the German Retail Sales and then the US Durable Goods Orders. The Aud also got a reprieve ahead of tomorrows CPI although the Kiwi remains heavy, at trend lows, ahead of Thursday’s RBNZ Meeting. US Stocks have been choppy, but firm, following the solid performance from EU equities, where the DAX finished at an all time high. Commodities are a bit lower.
AUD USD
Having seen an early dip to a low of 0.7857, the Aud has squeezed higher through Europe and NY, assisted by buying in Aud/Jpy, so far reaching a peak against the US$ of 0.7933.
There is a bit of secondary, local data dues today (NAB Business Confidence) although the US Durable Goods are likely to be the main focus. The main event for the week though, will be tomorrow’s CPI (exp 0.3%qq, 1.8%yy) and while we may get a short covering to squeeze before then, a CPI reading below estimates would erase any gains as the market begins to feel that an RBA rate cut could become a reality at the Feb 3 meeting.
Technically, the chances of a further short squeeze seem reasonable, which could propel the Aud towards 0.7942 (23.6% of 0.8230/0.7857), 0.7955 (minor) and then towards 0.8000 (38.2% of 0.8230/0.7857), which should be very strong. A break above 0.8000 though, could see further gains towards the 100 HMA (0.8040) and then to 0.8085 (61.8%), although I don’t see it happening today.
The downside will see bids once again at 0.7900, a break of which would head towards Monday’s low, where the descending channel base is providing support. Under 0.7850, which seems unlikely today, would head towards 0.7800 and then to 0.7765 (200 Month MA), 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 today, look for a range of 0.7885/0.7985 to cover it.
Economic data highlights will include:
WBC Leading Index, NAB Business Confidence/Conditions, China Leading Economic Index.
Jim Langlands
FX Charts
www.fxchartsdaily.com
