AUD/USD: 0.7835EUR/USD: 1.1400The currencies continued to chop around on Friday, driven by the latest headlines coming from the EU/Greek talks on the renegotiation of Greece's debt. The end result was that the Euro finished up pretty much where it started, after an agreement of sorts, to extend the bailout period for 4 months. The winner was the Aud$, which benefited from the improved risk sentiment, while the Yen lagged, as the need for a safe-haven diminished. This week will be busy with plenty of data due for release but with the highlight probably going to be Janet Yellen's semi-annual testimony to the US congress (Tue/Wed). The market will be watching closely for any possible hint as to when the first rate hike might occur, although she is likely to give very little away at this stage. Today leads off with the German IFO & the US Existing Home Sales, while later in the week key features will be a couple of speeches by Mario Draghi, the German GDP (Q4) & EU CPI (Tue), The EU/German CPI, EU targeted LTRO (Thur) and the US GDP, Durable Goods Orders (Fri).
The Aud finished the week on a positive note, near recent highs as a soft US$ emerged in the latter half of Friday's session and assisted by the improved positive risk sentiment as the stories of the EU/Greece deal did the rounds.
The week ahead will continue to be thin in the absence of China, but to start with the indicators are looking positive, suggesting the possibility of a more sustained test of 0.7850, beyond which will want to take a look at the 6 Feb top at 0.7876, which should be strong resistance. Above here could see a run towards 0.7895 (23.6% of 0.8794/0.7625) and then to the 50% pivot of 0.8230/0.7625 at 0.7925, although probably not ahead of the main risks of the week, these being Janet Yellen's testimony to Congress (Wed/Thur), and then locally, the Capex (Thur). Above here could then see a run back towards the Fibo resistance at 0.7995 (61.8% of 0.8230/0.7625) for a more sustained look at 0.8000, above which would trigger a serious amount of stops.
On the downside, the 100 HMA is at 0.7805 and backed up by the 200 HMA at 0.7775 which would keep us within the recent range. A break of this would see further bids at last Thursday's low at 0.7756 below which could head back to Tuesday’s brief low, at 0.7740, seen immediately after the release of the RBA Minutes. Below there, 0.7720/25 will be the next support ahead of 0.7700, a break of which would then head to minor support at 0.7665/70 and possibly on to last Thursday’s session low of 0.7643.
A more positive bias could see a run towards the 0.7900 level today, although in the longer term I am still looking for the Aud to head lower. Watch for Janet Yellen on Wednesday though, as any sign of dovishness from her, hinting of a delay in any possible rate hike from the Fed, will have the US$ heading sharply lower and at the same time, sending the Aud higher.
Economic data highlights will include:
M: Chinese NY
T: Chinese NY
W: Chinese NY, Australian Construction Work Done, Wage Price Index, HSBC flash China Mfg PMI
T: Private Capital Expenditure
F: New Home Sales, Private Sector Credit.
Jim LanglandsFX Charts www.fxchartsdaily.com
