AUD/USD: 0.7890EUR/USD: 1.1110Mixed data from the EU, as well as some soft manufacturing data from the US, has left the dollar mostly rangebound today, apart from Cable which benefited from strong UK retail sales figures. The other major move today was in WTI, which rebounded higher, to the top end of its recent range, on the view that a global glut may be starting to ease. Today will be busy ahead of the US long w/e. The BOJ meeting will be the Asian highlight and in the EU the German GDP and IFO will be released ahead of the day’s key focus, this being the US CPI. Mario Draghi, Mark Carney, Janet Yellen and the BOJ’s Kuroda will all be speaking late in the day, so there is plenty of room for some serious volatility in what will be fairly illiquid markets late in the day. Have a good weekend.
The Aud has endured a choppy 0.7865/0.7912 range, and with little to drive the action today it will be offshore events that dictate the direction but for the most part we could be in for another session stuck relatively close to 0.7900.
Keep an eye on the iron ore price, which has fallen for an eighth consecutive session and won’t help the Aud today. It is now at a 3 week low of $US57.60 a tonne, down 0.3%from its prior close of $US57.80 a tonne. The main focus today will be on Janet Yellens speech later in the day. Ahead of that the China Leading Economic Index will be released.
Below the 0.7865 session low, the 100 DMA at 0.7840 will provide the initial support, below which could then head towards 0.7800 and then to the spike low seen after the RBA rate cut, at 0.7785, where the 55 DMA currently also sits. Further support will be seen at 0.7770 (61.8% of 0.7532/0.8162), below which, unlikely today I suspect, would head towards 0.7710 (minor) and then to 0.7682 (76.4%).
The topside will again find sellers at 0.7900 and above, towards 0.7915. A break of this could head towards 0.7950 and then to 0.7985, where the 100/200 HMAs are crossing, but looks unlikely today.
With the dailies pointing lower, the theme remains the same as yesterday. While I prefer to be structurally short, there might be better levels to sell into and so, while running a core short position, leave room to resell above 0.7900, with a SL placed above 0.7950.
Economic data highlights will include:
China Leading Economic Index.
Jim LanglandsFX Charts www.fxchartsdaily.com
