AUD/USD: 0.7825EUR/USD: 1.1000Slightly firmer US core inflation figures and a mildly upbeat Janet Yellen, who hinted that a rate rise is on its way – eventually – combined to send the sharply dollar higher on Friday against all its major counterparts. Further gains could be seen this week, although today will be thin on the ground due to holiday’s in both Europe and the US. The main focus of the coming week will be the US Durable Goods (Tues) and then the provisional Q1 US GDP (Fri). With only Asia being involved, the highlights today will be the NZ Trade Balance, and then from Japan, the BOJ Monthly Economic Survey. Watch out for Greece news today. The weekend press suggests that a default may not now be too far away. It will be very thin due to the holidays, so any news could bring about some exaggerated moves.
Having reached 0.7930 in late Asia on Friday, the Aud reversed lower, to 0.7878, ahead of the US CPI and then fell sharply to 0.7809 after the data was released, before finishing the week at 0.7820, right on the 200 Month MA, which is now in its 5th month of acting as a pivot.
There is little domestic data due this week, so events will be largely driven from offshore flows, but the US$ looks to have resumed its uptrend and with the momentum indicators generally pointing lower a stronger test of 0.7800 would seem only a matter of time.
Below 0.7800, the points to watch are at 0.7785, the spike low seen after the May RBA rate cut, and 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%).
On the topside, the 100 DMA is at 0.7840, above which would see a run back towards 0.7880 and then to 0.7900, but which seems unlikely to be seen in the short term. If wrong look for another run towards 0.7930, where once again I think it would be a decent sell, with a SL placed above 0.7950.
Economic data highlights will include:
W: WBC Leading Index, Construction Work Done
F: HIA New Home Sales, Private Sector Credit.
Jim LanglandsFX Charts www.fxchartsdaily.com
