AUD/USD: 0.7015EUR/USD: 1.1200The increasing market sentiment that the Fed may sit on its hands next week, keeping rates unchanged, kept the US$ under some pressure against most of the majors today, with the exception of the Yen, but with Cable being the main beneficiary, on the back of some M&A talk. The commodity bloc also did well, assisted by their comparative yield advantage as well as the firmer stock markets and commodity prices. Choppy markets, while waiting for next week’s FOMC meeting seem to be likely, although before then the BOE and RBNZ both meet tomorrow. Today’s main action will again focus on Sterling, where the UK Manufacturing Production, Industrial Production, Trade Balance, NIESR GDP Estimate are all due. There is nothing from the EU or the US to influence things today though. Australia gets the WBC Consumer Confidence and the Investment Home Lending, while the RBA’s Lowe and Debelle will also be speaking.
The Aud is firmer today after a solid session, climbing higher in Asia and then again in Europe & NY, assisted by the strength in stock markets and in commodities, where oil, iron-ore & copper all rallied, and it was not harmed at all by the diminishing likelihood of a Fed rate hike at next week’s meeting. December is now generally being eyed as the time for any move by the Fed.
The RBA assistant Governors, Lowe & Debelle will both be speaking later and the initial focus will be on what they have to say. Also, keep an eye on what Chinese stocks are up to although after a better session yesterday, backed up by the stronger US markets today, the Chinese markets may be somewhat calmer.
The Aud not recovered 0.7000, assisted by the bullish divergence in the 4 hour charts, which did their job, as we discussed yesterday, and it is now sitting up against the resistances offered by the spike low of 24 August at 0.7033 and the 200 HMA, currently at 0.7040. If these levels can be overcome, as the 4 hour charts suggest will eventually happen, then look for further gains towards 0.7060 and to 0.7100. Beyond there, Fibo resistances lie at 0.7122 (23.6% of 0.7848/0.6900) and then at 0.7200 (23.6% of 0.8162/0.6900), where the major descending trend resistance also lies.
The initial buyers will arrive at 0.7000 and then at 0.6970 (100 HMA), a break of which would see 0.6950, ahead of stronger support at 0.6900. As before, once back below 0.6900, there is little support until the April 2009 low at 0.6855, below which would then suggest a run towards 0.6773 (June 2004 low). A break of this would then open a black hole, in terms of support, until we reach the major Fibo support 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.
Economic data highlights will include:
RBA Governors Lowe/Debelle speeches, WBC Consumer Confidence, Investment Home Lending.
Jim LanglandsFX Charts
