The march of the dollar continued as the markets focus turns towards next week’s FOMC meeting and the chance that the word patient will be removed from the statement which would give the green light to a summer rate hike, possibly as soon as June. The Euro, Jpy, Aud and Chf all made new trend lows today and it looks as though there will be plenty more to come. Equity markets do not like the idea of a rate hike and have headed sharply lower as has WTI which has given up 2.5%. Today's focus will be on a Mario Draghi speech, while in Asia there is a range of data from China (New Loans, RS, IP, UI). Australia get the Consumer Confidence data, while RBA governor Kent will be speaking and may take another swipe at the Aud.
The Aud has made a new trend low at 0.7603 today, not helped by yesterday's soft NAB Confidence readings or the broad based USD strength, and looks as though it is headed towards the Head/Shoulders target at 0.7585.
Today sees the March WBC consumer sentiment data (prior 100.7/8.0%) and a speech from RBA Assistant Governor Kent, who may take another swipe at the Aud in an attempt to send it to the previously mentioned RBA target of 0.7500. There is also some important Chinese data and a generally soft reading is likely to help the Aud on its way to lower levels. Further out, I think that 0.7500 is only a temporary stop as the Aud heads towards 0.7000 and eventually to 0.6000. This will take a while, and in the meantime support below 0.7500 will be seen at the April 2009 high at 0.7382, but there is now much else ahead of 0.7000.
On the topside, 0.7650 and 0.7680 will provide the resistances today and it is difficult to see it head above here . If wrong, 0.7700 will then see sellers, above which the 100/200 HMA’s lie at 0.7730/0.7770.
While I think the Aud goes lower and therefore hold a core short position, note that the shorter term charts are showing some bullish divergence and thus it maybe that we do see a bit of a topside squeeze first, but which would only provide a better sell opportunity.
Economic data highlights will include:
WBC Consumer Confidence, Home Loans, China New Loans, Industrial Production, Retail Sales, Urban Investment.
Jim LanglandsFX Charts www.fxchartsdaily.com
