The dollar has found new life since yesterday’s manic sell-off in the wake of the FOMC announcement, and most currencies have given up much of their gains. Equities are generally lower, although the Australian SPI has held on to most of its gains, in eyeing the chance of an imminent RBA rate cut and will be closely watching what RBA Governor Stevens has to say today. Elsewhere there is little to drive the currency markets and it could be a rather quiet session, with many players sitting on the sidelines licking their wounds from yesterdays rout, me included!
After reaching the spike high at 0.7846 yesterday, the Aud has given up all its gains to currently sit at 0.7620, the day’s lows. Following the FOMC decision to adopt a cautious tone the market is now looking at the increasing chances that the RBA will act on its own and cut rates at next month’s meeting, and will be nervously watching today’s speech from the RBA Governor Stevens for any possible hint in that direction, at which he could also take another swipe at the inflated level of the Aud.
The immediate support is at 0.7610, below which the recent low at 0.7559 will come under fire, a break of which would then hint at a run to the RBA’s stated target of 0.7500. I think we are eventually heading there and lower over time, below which there is not too much to hold the Aud ahead of 0.7414 (Oct 2010 low). Under here there is very strong support at around 0.7200 where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773/1.1082 and 0.7180:76.4% of 0.6006/1.1082). I suspect that eventually 0.7000 will appear on the horizon (and eventually 0.6000!), but this is going to be some way off yet.
On the topside, the 100/200 HMA’s will provide a hurdle at 0.7650, beyond which would allow a return towards the short term Fibo levels of today’s fall, seen at 0.7666, 0.7700 and at 0.7728 although I don’t think we are heading up here.
The shorter term indicators look negative so keep an eye out for what Glen Stevens has to say.
Economic data highlights will include:
RBA Stevens Speech
Jim LanglandsFX Charts www.fxchartsdaily.com
