AUD/USD: 0.7380EUR/USD: 1.0925It has been largely a choppy and rather directionless session for the currency markets although the RBNZ just woke everyone up by cutting rates by 25 bp and flagged further cuts to come. This was well written into the price, sending the Kiwi higher as shorts scramble to square up. Commodities remain heavy, with copper at a new 6 year low as concerns over future Chinese growth continue to grow, not helping the Aud at all. Today will again be rather thin on the ground as far as data is concerned with the focus, in Asia, being on Japan’s Merchandise Trade Balance and Foreign Bond/Stocks Investment, and then in Europe on the UK Retail Sales. Later on, the US will get the weekly Jobless claims, but that is about it, so we could be another choppy, but rather directionless session.
The Aud ran out of steam on the topside at 0.7438 yesterday, before some choppy trade following the release of the CPI and then remaining heavy through much of the session in reaching a low of 0.7360, before a mild bounce to finish the day at 0.9375. Concern over China remains in traders’ minds and was not helped today by Copper falling 2%, to a 6 year low, hinting at a reduction in future Chinese demand as economic growth falters.
Technically the Aud looks as though it will remain within the 0.7300/0.7500 band for the next session or two, but selling into strength still remains the favoured play. .
0.7400 (200 HMA) will act as the initial resistance, but a break of which would head towards 0.7430 (minor) and the session high of 0.7448. Above this may be unlikely today, but further gains would open the way to last week’s high at 0.7488 and even to 0.7500. Beyond here would head towards the Fibo resistance at 0.7526 (38.2% of 0.7848/0.7327).
Bids will arrive at 0.7360 and at yesterday’s 0.7340 session low. Below this, the 0.7327 trend low would provide decent support ahead of 0.7300, a break of which – unlikely today – would head to 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.
Jim LanglandsFX Charts www.fxchartsdaily.com
