AUD/USD: 0.7115EUR/USD: 1.1215The FT banner headline("Beijing scraps large-scale stock buying"), printed shortly after Monday's Asian open, provided the early trend for the week, after which the market generally moved in to some choppy-sideways trade while traders sit on their hands while waiting the key event risks of the week (ECB, NFP). Today will look to the global manufacturing PMIs for direction; and we also get the September RBA Meeting. No change is expected to policy, with various analysts calling for rates to remain on hold for the next 12 months, and the focus will all be in the wording of the statement.
AudUsd has traded in heavy fashion almost from the session opening levels, after the FT headline hit the wires, and remains so, despite having recovered from the session low of 0.7081, seen in the US, to currently sit at 0.7115.
Today is going to be busy, with the main focus to be on the RBA Interest Rate Decision. No change in rates is the unanimous view, but the statement will be closely watched, with an increase in focus expected by the RBA on the Chinese outlook and for what it might mean for the domestic situation, global growth, commodity prices and the currency. Before the RBA, the China Manufacturing PMIs will be released and could cause some volatility.
Technically, AUDUSD remains under pressure, with a break of the session low likely open the path to 0.7070 and then to the trend low at 0.7037. Below this would see a run to 0.7000, and lower, where the next support would arrive at 0.6952 (April 2009 low) but seems unlikely to be seen yet, unless the RBA are overly dovish in their outlook.
The topside will see sellers at 0.7135 (100 HMA), 0.7162 (session high) and at 0.7185 (minor) ahead of Friday’s high of 0.7205 (minor) ahead of 0.7250, which has recently acted as a bit of a pivot. A break of this, which currently looks highly unlikely, would encounter further offers at 0.7300/10.
The dailies continue to point lower, and selling into strength would seem favoured with stops placed above the short term descending trend resistance at around 0.7260.
Economic data highlights will include:
Building Permits, China Mfg/Non Mfg PMI, Caixin Mfg PMI, RBA Interest Rate Decision/Statement
Jim LanglandsFX Charts
