AUD/USD: 0.7730EUR/USD: 1.0900It has been a choppy session, with conflicting stories coming out of Greece being the main driver against the EU majors. The Yen came under some pressure of its own following the BOJ Minutes, with the dollar heading onto a new 7 year high and with the likelihood of more gains to come. Today will see a fair bit of secondary data (EU Economic Sentiment Indicator, Business Climate, Consumer Confidence, US Jobless Claims, Pending Home Sales) but the market seems likely to remain rangebound ahead of tomorrow’s US GDP release. The main event in Asia will be the Australian Capex and the Japanese Retail Sales. From the UK, we get the Provisional GDP (Q1).
The strong US$ and tighter yield spreads combined to push the Aud down to a new trend low at 0.7690 in NY, from where we have seen a bounce, to currently sit at around 0.7730, unchanged from late Asia yesterday. Today’s focus will be on the important Q1 Capex (exp -2.2%, previous -2.2%) which will show how Australia is coping with the transition away from the reliance on the mining sector. Also to be released will be the estimates for future expenditure. A Capex number that is worse than the expectation could see the Aud very quickly back at/below the session lows.
Technically there is little change in the outlook, and while the hourlies show some bullish divergence - pointing to the chance of a near term run to the topside - the dailies remain negative and thus selling into strength remains the general theme.
Sellers will again appear at 0.7750 and then at the session high at 0.7768, which comes ahead of the descending trend resistance now at 0.7790. Much above here would seem unlikely today, and 0.7800 will see decent sellers on account of the 100 HMA and Fibo resistance (23.6% of 0.8162/0.7690). The 200 month MA is also at 0.7815 and while I don’t think we are going above it again for a while, it has acted as a pivot for the Aud for the last 5 months and could continue to do so.
On the downside, back below today’s 0.7690 low will find buyers nearby at 0.7682 (76.4% of 0.7532/0.8162). A break of this would then head towards the rising trend support, currently at 0.7635, below which would open up the path to 0.7600 and an eventual retest of the 0.7532 trend low, but which is going to take a while.
Wait for the Capex, but with a preference to playing the Aud from the short side and looking to sell into strength towards 0.7800.
Economic data highlights will include:
Capex.
Jim LanglandsFX Charts www.fxchartsdaily.com
