AUD/USD: 0.6950EUR/USD: 1.1260The US Labor Day holiday has meant some quiet market conditions, with little to excite the traders, which now seem likely to stand aside until the September FOMC Meeting, next Wednesday. Before then, today will look to the Chinese Trade Balance for August and then later, on the EU Q2 GDP to provide the direction. On top of the China data, the AUD will focus on the NAB Business Conditions and Confidence figures for guidance.
The Aud did little liven up the markets on Monday, although it did manage to hang on above 0.6900, trading a 0.6907/63 range. That may change today if the NAB Business Conditions/Confidence and the China Trade Balance fails to impress markets. The data aside, also keep an eye out for the direction of Chinese stocks again, which fell 2.5% yesterday after China returned from the 2 day holiday.
The technical outlook is unchanged although the 4 hour charts are oversold and appear to be turning higher, so any downside progress may again prove rather limited should the Aud make another attempt on 0.6900. Once we get back below 0.6900 though, there is little support until the April 2009 low at 0.6855, below which would then hint at a run towards 0.6773 (June 2004 low). Under here would then open a black hole, in terms of support, until we reach the major Fibo level at around 0.6250 (76.4% of 0.4773/1.1082), which ties in with the lows seen in Feb 2009. Under here, we are then looking at our long term objective of the last 12 months at 0.6000, where the Head/Shoulder objective lies.
Sellers will again gather at 0.6960/ 0.6970 and then at 0.7000. If and when 0.7000 is seen, further gains could take the Aud towards 0.7033 - the spike low of 24 August, and then to 0.7060 and to 0.7100 although this seems well beyond the horizon at present. If the FOMC leave rates on hold next week then the US$ will come under some pressure of its own and could bring about a decent bounce in the Aud.
Economic data highlights will include:
NAB Business Conditions/Confidence, China Trade Balance
Jim LanglandsFX Charts
