It has been generally a rangebound session, although the commodity bloc made some decent gains, with the Aud and Kiwi both finding favour on the basis of their yield, while at the same time triggering stop losses in a market trading from the short side. Today will be a busier day (hopefully!), with the Australian Capex and the NZ Trade Balance kicking things off. Later on we will see the German/EU Consumer Confidence, Unemployment and EU LTRO figures, while from the US we get the CPI, Durable Goods Orders, House Price Index & Jobless Claims. From the UK comes the provisional Q4 GDP.
The Aud extended its gains after taking out the stops above 0.7850 today, in reaching a high of 0.7900, where it currently sits towards the end of the NY session.
This are should continue to act as short term resistance (23.6% of 0.8794/0.7625), although the indicators do look positive and we could therefore see a run towards the descending trend resistance at around 0.7945. Above here would see an acceleration towards 0.8000, beyond which would trigger a serious amount of stops, with the potential for a run towards the pivot (red horizontal line) at 0.8030. Above this would put serious doubts into the near term resumption of the downtrend, although I don’t really see it happening unless the US$ sees a major selloff.
If the Aud does run out of steam up here, then a reversal will find bids nearby at 0.7870 and again at 0.7850. Below there would head back towards 0.7830 and 0.7800 for an extension of the recent choppy directionless trade above 0.7740.
Today will get its direction from the Capex figures, with expectations of a reading of -1.9% following on from the previous +0.2%. If the result is better than the expectations, then the short squeeze will continue, possibly for a look at 0.8000.
For the time being, it looks as though buying the dips is the plan, although as we approach 0.8000, I still prefer the idea of building a medium term short position.
Economic data highlights will include:
Private Capital Expenditure
Jim LanglandsFX Charts www.fxchartsdaily.com
