AUD/USD: 0.7085EUR/USD: 1.1125The US$ has climbed higher again today, continuing its move, seen since last week's FOMC decision, rising against all the other majors despite the general concerns about the global growth outlook and what that might mean for the US economy. With talk of the ECB increasing its QE programme, and various other central banks also potentially looking at easing rates, the dollar is riding the wave of widening yield differentials and increasing demand for yield. We will find out more today with the release of the global flash PMIs. China will lead off with the Caixin manufacturing figure around lunch time in Asia. Later on, apart from the PMIs, the other interest today will be a speech from Mario Draghi who will likely be dovish, once more, in his outlook for the EU economy.
The Aud headed lower today, undermined by the souring risk-sentiment running through the markets, falling from its Asian high of 0.7158 to a low of 0.7056, where the minor rising trend support is currently holding it up.
Today’s action will initially be driven by the China September Caixin Mfg PMI, which if below the August result of 47.1 may see the Aud come under further pressure. The RBA Annual Report and the Financial Stability Report are also due but should have minimal impact.
Below the session low would see a run towards Fibo support at 0.7043 (61.8% of 0.6900/0.7279) and then to 0.7000. Once back below here, 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 0.7100 (minor), and then at the 200 HMA at 0.7137. Above here looks a bit doubtful, but further gains would take the Aud back towards the session high (0.7156) and to 0.7165 (100 HMA). I don’t see this happening today, but if wrong, look for further gains towards 0.7200.
Economic data highlights will include:
CB Leading Indicator, Financial Stability Report, RBA Annual Report, Caixin China Flash Manufacturing PMI.
Jim LanglandsFX Charts
