AUD/USD: 0.7650EUR/USD: 1.0985Friday’s US GDP caused some mild volatility but little directional movement for the dollar against the major counterparts. The outcome gave no hint that the Fed need to raise rates any time soon, and thus trade is going to remain very data dependent as we head into June. Although the US data remains generally soft, the Yen, Cable and the commodity bloc currencies all have problems of their own, which looks likely to continue in coming weeks. This week is data heavy, with interest rate decisions due from the RBA, ECB and BOE. There will be plenty else besides, kicking off today with the EU Mfg PMI’s, German CPI, US Personal Consumption/Expenditure, ISM, Mfg PMI. Ahead of that, Asia will wake up to the China/HSBC Mfg/Non Mfg PMIs, Japan and Australia Mfg PMIs. Australia also gets the TD Inflation and Building Permits, so it could be a busy session. NZ holiday.
The Aud headed rather quietly into the month-end with a narrow 0.7628/73 range on Friday, although it could be very active in the coming week, with a whole raft of important data due, kicking off today with the AIG Performance of Mfg Index, TD Inflation, Building Permits and also the Chinese Mfg and Non-Mfg PMIs.
Tomorrow will see the RBA Meeting, at which no change to policy is expected, but the statement is likely to have a dovish lean to it which would keep the Aud under pressure. Further out, the Q1 GDP is due on Wednesday, the Retail Sales and Trade Balance (Thur) and the AIG Construction Index (Friday), which will all add to make for a busy week ahead of Friday night’s US Jobs data..
While the 4 hour indicators are attempting to turn a little higher, the daily charts still point sharply lower and a more sustained test of 0.7600 would seem to lie ahead. Once below 0.7600 the Aud would then look to retest the 0.7532 trend low and the RBA’s line in the sand at 0.7500. As we said before, I think we are eventually heading there, and eventually, a fair bit lower, and below 0.7500 there is not too much to support the Aud ahead of 0.7414 (Oct 2010 low), and beneath which there is a bit of a hole until the very strong support at around 0.7200 where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773/1.1082 and 0.7180:76.4% of 0.6006/1.1082). I suspect that eventually 0.7000 will appear on the horizon (and eventually 0.6000!), but this is going to be some way off yet so don’t get too excited!.
Nearer home, the topside will now see sellers at 0.7680 and at 0.7700 ahead of last week’s post-Capex high at 0.7712, which now ties in with the descending trend resistance that would appear likely to cap any near term gains. If wrong, further rallies would take the Aud back to Fibo resistance at 0.7745 (23.6% of 0.8162/0.7616) and on to the 200 HMA at 0.7795 and the next Fibo resistance at 0.7823 (38.2%).
Selling rallies still seems to be the general idea.
Economic data highlights will include:
M: AIG Performance of Mfg Index, TD Inflation, Building Permits, China Mfg/Non Mfg PMIs, HSBC China Mfg PMI, RBA Commodity Index
T: RBA Interest Rate Decision/ Statement
W: AIG Performance Services Index, GDP, HSBC China Services PMI
T: Retail Sales, Trade Balance
F: AIG Performance Construction Index.
Jim LanglandsFX Charts www.fxchartsdaily.com
