AUD/USD: 0.7425EUR/USD: 1.1070China has managed to overtake Greece as the biggest story in town following yesterday’s stock market meltdown, and with US equities also heading lower, not helped by today’s glitch that closed the NYSE for 3 hours. The major winner amongst the currencies was the Yen, which saw a rush of safe haven demand, while the US$ came under some pressure following the rather dovish FOMC Minutes. All eyes will again be on the China stock market open today, but with the focus also remaining on Greece ahead of the weekend deadline for the Greek Government to come up with some solid proposals that would allow it to remain within the EU. Elsewhere, Asia will look to the China CPI and the Australian Jobs data for guidance ahead of the German Trade Balance and the weekly US Jobs data. Overall, it will be the Chinese stock market that concentrates the minds of traders today.
After falling from the early session high of 0.7458, the Aud has recovered from the early European selloff, to new 6 year lows at 0.9372, squeezing back to a high of 0.7449 before settling at 0.7425.
It will now sit around here while waiting for the outcome of today’s important data, being the domestic employment (exp 6.1%, -5K and a PP of 64.7) and the China CPI (exp -0.1%mm June, +1.3%yy). Most analysts think the headline unemployment rate will jump back to 6.1% after last month’s surprise fall to 6.0% and this would keep the pressure on the downside for the Aud.
Technically it appears that while the dailies point sharply lower, it maybe the topside that comes under some near term pressure. The 4 hour charts appear to be turning higher and if the jobs data is reasonable, then we might see a run towards the descending trend resistance, currently at 0.7460, a break of which would head towards the 100 HMA (0.7485) and back to 0.7500. The data would have to be pretty good to make it beyond here, but further offers would arrive at the 6 July high at 0.7532 and the 200 HMA at 0.7575.
Bids will arrive at 0.7400 and at 0.7372, the session low. I would be doubtful of heading under here today, but if wrong the next target will be 0.7300 and 0.7285 (100% extension of 0.8162/0.7597 from 0.7848), below which there is a black hole of support ahead of the very strong level 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).
Look for a choppy session, but generally holding on above the 0.7372 low, and possibly squeezing a bit higher.
Economic data highlights will include:
Consumer Inflation Expectation, Unemployment, China CPI, PPI.
Jim LanglandsFX Charts www.fxchartsdaily.com
