AUD/USD: 0.7930
EUR/USD: 1.1370
The US$ and stocks both came under pressure following today’s weak US Durable Goods Orders, as traders turn their attention to today’s FOMC meeting, with growing speculation that the Fed might hold off on raising interest rates for longer than has been expected. Today’s other big event will be the Australian CPI, at which a soft reading – on the back of lower petrol prices – is expected. If that turns out to be the case, it would put another dent in the Aud, pushing it towards the RBA’s stated objective of around 0.7500.
The Aud held its own in Asia yesterday despite some soft data from both Australia (NAB Business Confidence – Dec) and China (Industrial Profits – Dec), and squeezed steadily higher through the session reaching a peak of 0.7974 as the US$ came under pressure following the soft US data, before turning a bit lower late in the session as traders look towards today’s local data.
The Q4 CPI (exp 0.3%qq, 1.8%yy) is the local highlight of the week and will be closely watched for any possible hint of action from the RBA at next Tuesday’s meeting. Anything below the estimate will cause the market to feel that an RBA rate cut is a real possibility and will put a dent into the chances of any potential recovery before then.
Points to watch, on the downside are at 0.7900, 0.7880 and at the trend low at 0.7857, where the base of the descending channel is providing some support. Under 0.7850, 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.
On the topside above 0.7975 will find decent sellers at 0.8000 (38.2% of 0.8230/0.7857), although if the CPI surprises to the topside (unlikely given the recent fall in petrol prices) it will get a real workout. Above here (doubtful) would see a run towards 0.8050 (50% pivot of 0.8230/0.7857) and then to 0.8085 (61.8%), although I don’t see it happening today.
Trading from the short side is preferred and if we see a rally to/above 0.8000, looking to sell into it.
Economic data highlights will include:
CPI.
Jim Langlands
FX Charts
www.fxchartsdaily.com
