AUD/USD: 0.7725EUR/USD: 1.1250It was a choppy end to the week, with little directional move from the currency, bond or commodity markets, although equities ended lower on the usual Greek concerns. This week’s focus will be largely on the Fed, with traders looking for any guidance as to when we might expect a rate hike. Before then, Mario Draghi is due to address the EU Parliament today. Greece event-risk is ever-present as well and will remain a key focus now that time is running out to reach a viable conclusion that would see Greece repay its debts and avoid a default. The coming session will also see the EU Trade Balance, US Industrial Production, Capacity Utilisation and NAHB Housing Market Index. Before then Australia gets the Consumer Survey and a speech from the RBA's Kent.
The Aud fell briefly to 0.7677, on the back of general US$ buying in early European trade on Friday, but gradually recovered, helped by a reversal in the fortunes of the US$ as Treasury yields slipped lower.
There is little major Australian data this week and the main event will be tomorrow’s RBA Minutes. Ahead of that the RBA’s Kent will be speaking today, who might try and talk the Aud lower although after Glen Stevens’ recent efforts to do so he might be better off not saying anything at all about the currency. The week's main event though will be the FOMC meeting, and following on from the recently firm data, a hawkish outlook from Janet Yellen could see the Aud head quickly to retest the current 0.7600 support.
Ahead of that, the topside will find offers at Friday’s 0.7757 high, above which could see another run to 0.7785 and on to 0.7800. Above here would revisit the 3 June high at 0.7818, beyond which will see sellers at the Fibo pivots at 0.7845 and 0.7880 although this looks unlikely in the near term.
The downside will see bids at 0.7715 (200 HMA) and at 0.7700, a break of which could see a move back to 0.7770. Under here looks unlikely today, but further bids would arrive at 0.7630 and at 0.7600.
Further out, nothing has changed, and in the event of a hawkish outlook from the Fed on Wednesday the US$ could see a run higher, placing its counterparts, including the Aud, under pressure for a more sustained test of the 0.7600 support, below which would head towards 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 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).
In the meantime expect more choppy trade within the 0.7600/0.7800 range, but looking to sell into strength.
Economic data highlights will include:
M: WBC Consumer Survey, RBA Kent Speech
T: New Vehicle Sales, RBA Minutes
T: China House Price Index
Jim LanglandsFX Charts www.fxchartsdaily.com
