AUD/USD: 0.7085EUR/USD: 1.1335The US$ traded under some pressure heading into the weekend as long positions were reduced ahead of the FOMC Meeting, with considerable conjecture as to Federal reserve will raise interest rates - or not . This is going to be the entire focus of the market for the week although there is plenty of other economic data due as well, with highlights being the BOJ Meeting/IR Decision, Statement, Press Conference, followed later by the German/EU ZEW Economic Sentiment Survey, UK CPI and US Retail Sales (all on Tues), the EU and US CPI (Wed) and the SNB IR Decision/Statement and UK Retail Sales (Thur). Until Thursday, the markets may well just remain choppy, but without too much directional movement, and with very little data due today it could be one of position squaring as we approach Thursday's event risk.
The Aud had a volatile but rather directionless session heading into the weekend, trading a 0.7035/0.7091 range, closing near its highs while awaiting the outcome of the weekend Chinese data (Industrial Production, Retail Sales Urban Investment). Having been released on Sunday, the data has turned out to be mixed, meaning the Aud is likely to open unchanged, possibly slightly lower in early Monday trade. China August data: Industrial Production 6.1% v exp 6.4%, Retail sales 10.8% v exp 10.5%, Urban Investment 10.9% v exp 11.1%).
In the coming week, the Aud has little data of its own to shake the markets up and all eyes will be on the Fed, and we should expect a decent sized reaction, one way or the other, depending on the outcome. Locally, the RBA Minutes will be the main event this week, but their impact should be marginal.
Technically, last week finished by leaving the outlook, pretty much unchanged. Both the 4 hour and the daily charts do look positive, so a retest of 0.7100 would not really surprise at some stage. A break of 0.7100 would lead to the Fibo resistances which 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 currently lies. Ahead of 0.7200, the 1 Sept spike high at 0.7152 will find interested sellers.
Buyers will congregate into dips at around 0.7050 and then again at Friday's 0.7035 low. Under here would then encounter bids at 0.7025 (100 HMA) and 0.7005 (200 HMA). Below here looks unlikely today, but further support would arrive at 0.6945 (session low) and then at 0.6900.
Further out, as previously mentioned, once back below 0.6900, there is little support until the April 2009 low at 0.6855, below which would then suggest a larger decline, possibly leading to 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.
Economic data highlights will include:
M:
T: New Vehicle Sales, RBA Minutes
W: WBC Leading Economic Index
T: RBA Bulletin
F:.
Jim LanglandsFX Charts
