AUD/USD: 0.7475EUR/USD: 1.0985It’s all very nervous out there at this morning’s market open following the resounding “No” vote in Greece against accepting further austerity. The Euro has opened around 100 points lower and is sitting in trepidation of what might happen next and we might well just hang around 1.1000 during the Asian session, waiting for the lead to come from Europe. When in doubt, call an emergency meeting to discuss the situation and to work out what to do next. The EU have now done this with a summit due to happen tomorrow. Elsewhere, the Aud is in trouble, trading below 0.7500 this morning and looking likely to head lower. The Yen, Chf & US$ are the overall winners as the market runs to safety. Greece will put everything else in the shade today (and for the rest of the week), but elsewhere, we get the German Factory Orders, EU Sentix Investor Confidence Survey, Composite/ Services PMIs, ISM Non-Mfg, US Labor Market Conditions. Australia leads off with the TD Inflation, ANZ Job Ads. Be nimble.
Last week’s Retail Sales did the damage to the Aud in propelling it lower from above 0.7700, and it continues to feel the heat this morning in early NZ trade, having broken below 0.7500, and with momentum pointing lower I suspect that it will be the downside that again remains the focus, although there is a gap to around 0.7520 which now needs to be filled in from Friday’s closing level. There is a bit of data out on most days of the coming week, starting today with the TD Inflation and ANZ Job Ads. The main event will arrive on Thursday with the release of the June unemployment figures, to be closely followed by the China CPI. The jobs numbers are expected to show a solid 42K growth, which seems a little at odds with what one reads in the press at present. The risk would seem to be to the downside. Keep a close eye on the Chinese stock market which saw a 5.8% decline on Friday, now almost 30% lower than its mid June peak. Another sell-off in coming days will increase the panic amongst investors and will likely keep the pressure on the Aud, although the Government have acted over the weekend in an attempt to halt the decline. Also of note, the Iron Ore price fell sharply (-6% on Thursday, 0.7%, Friday and 11% last week) and will do little to help build confidence in the Aud, with various banks predicting a price of $40-$50 by Q4 as supplies increase.
The topside will see sellers at 0.7550, 0.7585 and at 0.7600, all fairly minor. A break of secondary descending trend resistance at 0.7610 would see a rally towards the 100/200HMA’s at 0.7640/0.7675 and on to the larger descending trend resistance at 0.7700, but at this stage looks unlikely.
Technically it looks as though the Aud is now capable of further downside action. Below 0.7500 there is not too much to support the Aud ahead of 0.7414 (Oct 2010 low), 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 as I said 10 months ago, in the longer term, so will 0.6000
http://www.fxchartsdaily.com/audusd-aud-heading-0-6000-check-monthly-chart/). If correct, this is going to be some way off (2016/17?), so don’t get too excited yet!
Economic data highlights will include:
M: TD Inflation, ANZ Job Ads
T: AIG Construction Index, RBA Interest Rate Decision/Statement
W: WBC Consumer Confidence
T: Consumer Inflation Expectation, Unemployment, China CPI, PPI
F: Home Loans, Investment Lending for Homes.
Jim LanglandsFX Charts www.fxchartsdaily.com
