AUD/USD: 0.7835EUR/USD: 1.1145The markets have had a generally quiet session in the absence of the UK and Japan, (which will be out again today) although the dollar and equities were generally underpinned by some firm US factory data. Things will liven up though, starting in Australia, when the RBA monetary Policy announcement is released. The general expectation that the RBA will cut rates would put the Aud back under pressure, while no cut would see a spike back towards the recent highs. Later in the day, Europe will get the EU Economic Growth Forecast and the PPI, while from the US, the Trade Balance and the ISM Non Mfg PMI, Services and Composite PMI’s are due.
The market is pretty much on hold today ahead of the RBA announcement, at which a rate cut is generally expected. That being the case, the Aud should head lower, although if there is no cut, the market is already short and could result in another nasty squeeze higher.
There is little change in the outlook.
Ahead of the announcement, the topside will today see sellers at 0.7865 (200 HMA) and then at the minor Fibo levels of the fall from 0.8074 at 0.7905 (38.2%) and 0.7938 (50%). Above here would suggest another run to 0.8000, although there would be plenty of sellers lining up should we see it up here.
Below today’s 0.7801 low, where the 100 Month MA currently sits, would head towards 0.7753 (61.8% of 0.7552/0.8074) and then towards 0.7740 (55 DMA). Back below this would then open up 0.7700 and the 21 April low at 0.7697.
Wait and see what the RBA come up with. I think they will cut and that the Aud will head towards 0.7750.
Economic data highlights will include:
AIG Performance of Services Index, HIA New Home Sales, RBA Interest Rate Decision, Statement.
Jim LanglandsFX Charts www.fxchartsdaily.com
