AUD/USD: 0.7305EUR/USD: 1.1380A major selloff saw an extremely fragile weekly close for global equity markets, with the US Indices all down by 3.0-3.5% in Friday trade, pushed lower by global growth concerns following more soft data from China. The dollar did not fare too much better in losing ground heavily to the Euro, Chf and Jpy although elsewhere the pace was somewhat steadier. In commodities, the only winner on the day was Gold which saw some safe haven buying underpin it, while WTI hit new multi year lows. This week will be thin on the ground early in the week with little to provide direction today, so all eyes will again be on Chinese stocks. Beyond that the major highlights will be a speech from the RBA Governor, Stevens, on Wednesday; The US Durable Goods, also Wednesday; The provisional Q2 US Personal Consumption and GDP expectations (Thursday) and the Jackson Hole Symposium (Thursday/Friday).
The Aud has so far been unable to gain from the general US dollar weakness seen elsewhere, weighed down by the concerns over the global growth outlook and remains pretty much rangebound at close to 0.7300. The real moves on Friday were in the crosses, which saw a sharp selloff, as far as the Aud was concerned, particularly against the Euro, Chf and Jpy.
The coming week sees little data of consequence for the Aud, although the RBA Governor, Stevens, will be speaking on Wednesday and so the direction will be driven mostly by offshore events, with all eyes on China early in the week.
Technically, there is little to suggest in either direction as the short term indicators are pretty much flat, hinting at a continuation of the choppy sideways price action between the recent 0.7214 low (8 Aug) and the 0.7438 high (10 Aug).
Further out, if the US dollar weakness does eventually manifest itself through the Aud, then above the recent range top would see further strength towards minor tops at 0.7488/95 and on to 0.7500, which should see decent sellers. A beak above 0.7500 would allow a run towards 0.7575 (38.2% of 0.8162/0.7214), but currently seems some way off.
The downside will see bids close by at 0.7300, below which would open the path once again towards minor support at 0.7280 and then to the trend low at 0.7214, which will again be very strong support.
The two major Fibo levels are lining up at around 0.7200 (0.7210: 61.8% of 0.4773/1.1082 and 0.7180:76.4% of 0.6006/1.1082) and will not be easily broken, so shorts should again consider taking some profit down here, looking to resell into any bounce. If and when does 0.7180 give way though, then the Aud will be on its way to test the major rising trend support from Sept 2001 – joining the Sept 2009 low,- currently at around 0.7130.
For the time being more rangebound trade looks likely with a mild bias to the downside.
Economic data highlights will include:
M:
T: CB Leading Indicator, China Leading Economic Index
W: Construction Work Done (Q2), RBA Stevens Speech
T:
F: Private CAPEX
Jim LanglandsFX Charts www.fxchartsdaily.com
