AUD/USD: 0.7820EUR/USD: 1.0860More soft data from the US, this time the Durable Goods Orders, undermined the dollar at the end of last week and appears to give the Fed further reason to be cautious about raising rates at any time in the near future. This week's highlight will be the FOMC Meeting and rate decision, but no change looks likely in rates until September at the earliest, and only then if we see a pick-up in the economic numbers. The Eurogroup meeting achieved very little on Friday apart from kicking the whole issue out to the new deadline for Greece to come up with their economic reform package, now on May 25. The FOMC aside, the other main points to watch this week will be on Central Bank policy decisions by the BOJ (Wed) and RBNZ (Thur) as well as Provisional Q1 GDP data from the US (Wed) and CPI and Jobs data from the EU and Germany (both Thur).
The Aud performed strongly on Friday, briefly almost regaining the 17 April high at 0.7842 (Friday high 0.7840) after the release of the soft US data, before closing at 0.7820.
The line in the sand is therefore drawn at 0.7840/45, above which would trigger stops and open the path for further gains towards 0.7884 (26 March high), 0.7904 (25 March high) and to the trend high at 0.7937. While the indicators do point higher, it may find further gains a bit of a struggle today in the absence of any data and ahead of a speech tomorrow morning from RBA Governor Glen Sevens, who may well take the opportunity to talk the Aud lower once again.
The downside will now find support at 0.7800 and then at the 100/200 HMA’s which are closing at around 0.7750. Below there will find bids at 0.7725 and 0.7700/10.
Further out, below 0.7700 would head to the week’s low at 0.7682, ahead of the minor Fibo supports at 0.7665 and 0.7620. If/when we ever head back below 0.7600, decent support would lie at 0.7575, 0.7550 and at the trend low of 0.7532 (2 April low). Below this, 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).
Look for a choppy session. Use 0.7785/0.7845 as a guide, while waiting for the words of wisdom tomorrow from Mr Stevens.
Further out, with a May rate cut still in the wind, the upside for the Aud maybe somewhat limited.
Economic data highlights will include:
T: RBA Glen Stevens Speech
T: Private Sector Credit
F: AIG Manufacturing PMI, PPI, China Official Mfg/Non Mfg PMIs..
Jim LanglandsFX Charts www.fxchartsdaily.com
