AUD/USD: 0.7130EUR/USD: 1.1190Hawkish comments from Fed board directors Bullard and Lockhart over the possible timing of a US rate hike, as well as a more dovish outlook for the EU economy from a couple of ECB board members, combined to send the US$ higher against all its counterparts, and in particular, putting the Euro under some pressure. With little data due today, it is likely to be a fairly steady session, at least until the US get up and running, when the market will be looking towards any further possible Fed comments over the timing of any impending rate hike. Lockhart will be speaking again today. There is no data due from the EU, while the US gets the House Price Index and the Richmond Fed Mfg Index. Asia will look to the China Leading Indicator and the Australian House Price Index. It is a Japan holiday.
An early run high to 0.7195 was as good as it got for the Aud, which then began a steady decline, not helped by the hawkish Fed comments, to a low of 0.7121, finishing at 0.7130 where, for the time being the 200 HMA is preventing further losses. With the 4 hour charts pointing lower, a run towards 0.7100 would seem to be possible today, below which would head towards 0.7080 (minor) and then to Fibo support at 0.7043 (61.8% of 0.6900/0.7279) and to 0.7000. I don’t see it down here yet, but once back below 0.7000, we could then be in for another run towards 0.6945 (10 Sept low) and 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.
On the topside, offers will now arrive at 0.7150 (minor), and then at the 100 HMA at 0.7175. Above here looks a bit doubtful, but further gains would take the Aud back towards 0.7200. I don’t see this happening today, but if wrong, look for further gains towards 0.7230 (minor and then to Friday’s high at 0.7279).
Today should be reasonably steady, at least for the Asian session, given the Japanese holiday with only the domestic House Price Index and the China Leading Indicator to liven things up. Further hawkish Fed talk, later in the day, would put the pressure on the Aud once again for a sterner test of the downside.
Economic data highlights will include:
House Price Index, China CB Indicator
Jim LanglandsFX Charts
