AUD/USD: 0.7585EUR/USD: 1.0570US$ strength was again the general theme for much of the session, although that ran out of steam somewhat as the day wore on, particularly against the Jpy which took a nosedive at one stage before again recovering. The commodity bloc looks to be in trouble after yesterday steep selloff, although it may be a day of consolidation today for the Aud, while waiting for tomorrow’s local Consumer Confidence (& China GDP, RS, IP) and Thursday’s Jobs data. In the meantime the Aud will today look to the Business Confidence numbers for direction. Today’s main events will be the US Retail Sales, PPI and Business Inventories, while from the UK we get the UK CPI, PPI, RPI. China New Loans will be the main event in Asia.
The Aud was side-swiped by the Chinese data yesterday and also was not helped by the increasing speculation over the future price of Iron Ore. The selling followed through into Europe, where a low of 0.7552 was seen before a recovery of sorts, towards 0.7600, assisted by the slide in US$Jpy, and some choppy trade has since ensued.
Today’s action will come via the NAB Business Conditions/Confidence, and while the hourly charts are recovering from having become oversold, the overall trend remains lower and points to a retest eventually of 0.7550, below which would see a retest of 0.7532 (2 April low). Below here, the RBA’s line in the sand at 0.7500 will provide stronger support but a break of which would open up the way to 0.7414 (Oct 2010 low). Beneath this there is a bit of a black hole until the 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 even 0.6000!), but this is going to be some way off yet.
To the topside, 0.7600 will see the initial sellers ahead of 0.7615, 0.7622 (38.2% of 0.7737/0.7552) and 0.7637 (200 HMA). I doubt that we see this today, but if wrong look for a further squeeze towards 0.7650 and 0.7665 (100 HMA).
Selling rallies remains the theme, although ahead of tomorrow’s China GDP, Retail Sales data and Thursday’s Jobs numbers, the action may be tempered somewhat.
Economic data highlights will include:
NAB Business Conditions/Confidence.
Jim LanglandsFX Charts www.fxchartsdaily.com
