AUD/USD: 0.7130EUR/USD: 1.1270The US$ is mixed again today, while equities rallied, as liquidity begins to become thin leading towards Thursday’s FOMC Meeting. Expect more of the same until then, although the release of the inflation data from both the EU and the US may cause some decent moves today. A stronger than expected reading from the US number will underpin hopes of a rate hike from the Fed on Thursday and could push the dollar higher. Elsewhere, the main event will be the UK Employment data.
AUDUSD initially ran higher in Asia yesterday, taking out stops above 0.7150 in reaching 0.7165. The release of the RBA Minutes were taken as slightly dovish, reflecting the ongoing concerns over China and saw the Aud reverse its upwards momentum by falling to a low of 0.7085 by the time NY came in. Since then, a respectable bounce back to 0.7145 has ensued, assisted by some buying in AudJpy and also by the rally in US stocks which has underpinned the positive risk sentiment.
More choppy trade looks to be in store ahead of the FOMC Meeting, and the points to watch remain pretty much unchanged.
Beyond the session high of 0.7165 would now take out the descending trend resistance, as per the chart, and would trigger some stops which could then carry the Aud on towards 0.7200 (23.6% of 0.8162/0.6900). A break of this would lead back towards 0.7260 (38.2% of 0.7848/0.6900) but at this stage it remains over the horizon.
The downside will again see bids a 0.7100 and at the day’s low at 0.7085 (100 HMA). I don’t see it back down here today, but if wrong, further declines would run towards last Friday’s 0.7035 low and then to 0.7000. Below this looks unlikely for a while now, but further support would arrive at 0.6945 (session low) and then at 0.6900.
Further out, as we said 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.
Economic data highlights will include:
WBC Leading Economic Index. RBA Asst Governor Debelle Speech.
Jim LanglandsFX Charts
