AUD/USD: 0.7365EUR/USD: 1.0825The dollar finished the week on a strong note against all its counterparts after more solid data excited the markets as to the possibility of an approaching rate hike by the Fed before the end of the year. Equities were steady, although the Nasdaq finished at an all time high, while commodities were under pressure and appear to be hinting at a large move to the downside, particularly for Gold and Silver. We shall see. In the meantime, the economic calendar is fairly light this week, so moves will be event/technically driven. Of note, will be the RBA Minutes (Tues), BOE Minutes (Wed), RBNZ IR Decision, UK Retail Sales (Thur) and the global flash PMIs (Fri). Today leads off with the German PPI, EU Current Account. It is a Japan Holiday.
The Aud is pushing slowly lower, although it is providing plenty of frustration to the shorts in doing so. After having seen a decent squeeze up from Thursday’s 0.7349 lows, to as high as 0.7435, and then spending much of Friday looking bid – above 0.7400 – before drifting lower as the US data approached and then finishing the week at around 0.7370, the lowest weekly close since 2009,
The major focus this week will be the RBA Minutes which are unlikely to be much help to the Aud, and the pressure would seem set to remain on the downside, while later in the week we get the CPI and the HSBC China Flash Manufacturing PMI. Keep an eye on the long term commodity charts. Gold and Silver in particular look as though they are about to fall off a cliff and the base metals also remain very heavy. Further falls in Chinese equities would ensure the pressure remains to the downside.
Technically, the initial support remains at 0.7350. A break of this would then target 0.7300 and the Fibo extension support at 0.7288 (100% of 0.8162/0.7598 from 0.7848 – Blue Fibo structure on chart). Below this, there is then little to hold the Aud up until we reach 0.7200, which could appear on the horizon very quickly once the momentum, begins to build, albeit unlikely today.
Further out, as I have said many times, I suspect that eventually 0.7000 will eventually appear on the horizon and, 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!
The topside on Friday, will see 0.7400, 0.7425 (200 HMA) and 0.7435 again act as resistance. A break of this although unlikely, would trigger stops, taking the Aud onto 0.7450 and possibly back to last week’s high at 0.7488 and even to 0.7500, although I don’t see it happening.
Selling rallies to 0.7400 with a 0.7440 seems to be the plan.
Sell rallies seems to be the plan.
Economic data highlights will include:
M: China House Price Index
T: RB A Minutes, China CB Leading Economic Index
W: WBC Consumer Confidence Leading Indicator, CPI
T:
F: HSBC China Flash Manufacturing PMI.
Jim LanglandsFX Charts www.fxchartsdaily.com
