AUD/USD: 0.7695EUR/USD: 1.1285The dollar gave up Friday’s post-NFP gains, after comments attributed to Barack Obama at the G7 meeting, suggesting that the strong dollar is a problem for the US economy. Despite a denial that he had made such a comment the damage had been done and the US$ has remained under pressure ever since. Further choppy price action looks to lie ahead, with direction being largely data dependent but with the focus elsewhere being firmly on developments in Greece. Today will kick off with the China CPI, PPI, Australian Home Loans/Investment Lending, ANZ Job Ads and NAB Business Conditions/Confidence. Later on, focus will turn to the UK Trade Balance and Inflation Report Hearing, while from the EU comes the Q1 GDP and from the US, the Wholesale Inventories
The Aud was generally choppy above 0.7600 until the US$ weakness began to filter through, accelerating in the NY session, and taking the Aud up to a high of 0.7711. It will be a busy day today with plenty of data due, headed by the China CPI (exp 0.0%mm, 1.3%yy), PPI and the NAB Business Conditions/Confidence.
The charts suggest that in the near term the Aud could head a bit higher, and should this be the case, we could see a run towards 0.7735 and possibly on towards 0.7760 and to 0.7775. Above here would open the way to 0.7800 and to the 3 June high at 0.7818, although I suspect that this is some way off.
The downside is going to again see strong bids ahead of 0.7600, although this looks unlikely to come under pressure today. If wrong, then as we said before, below 0.7600 would open that way to a run towards the 0.7532 trend low and the RBA’s line in the sand at 0.7500, below which there is not too much to support the Aud ahead of 0.7414 (Oct 2010 low), and beneath that, there is a bit of a black 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).
Overall it looks set to remain choppy, with a mildly positive short term bias, but medium term players will be looking for areas to sell the Aud for an eventual run back to 0.7600 and lower.
Economic data highlights will include:
China CPI, PPI, Australian Home Loans/Investment Lending, ANZ Job Ads, NAB Business Conditions/Confidence
Jim LanglandsFX Charts www.fxchartsdaily.com
