AUD/USD: 0.7140
EUR/USD: 1.1520
The RRR from China cut was the main news in early European trade, allowing a partial recovery in the dollar and global equities. Many of those gains though have since dissipated following the heavy, late session sell off in US stocks, keeping the dollar under pressure as focus now turns to see how the Chinese markets will react to the cut. Today’s major economic points to watch will be a speech by the RBA Governor, Stevens, and then later on we get the US July Durable Goods Orders. Another wild ride seems to lie ahead, so a cautious stance will be required.
The Aud saw a recovery to 0.7249 in European trade but was unable to acquire any further strength from the Chinese rate cut and has since reversed to currently sit at 0.0.7140, weighed down by the late session selloff in US equities. The unimpressive price action suggests lower prices ahead, although this may be postponed if China reacts well to the rate cut once the Shanghai markets open.
Rallies will see sellers at around 0.7170 and at 0.7200 (both minor) ahead of 0.7250. A break of this would encounter further offers at 0.7300/10 but currently looks unlikely.
The downside will find buyers at 0.7100, below which would open the path to the trend low at 0.7033, below which would see a run to 0.7000 and lower. The next support would arrive at 0.6952 (April 2009 low) but seems unlikely to be seen yet.
The RBA’s Glenn Stevens will be speaking later and will be worth keeping an eye on.
Trading from the short side seems to be the plan.
Economic data highlights will include:
Construction Work Done (Q2), RBA Stevens Speech
Jim Langlands
FX Charts
