Risk aversion has been the name of the game today, with commodities and equities coming under heavy pressure as the market grows increasingly concerned about the economic growth outlook in China. The commodity block currencies took a hit, as did Cable, which fell on the back of the collapse in the Glencore share price, and markets look set to remain on the defensive ahead of the China manufacturing data (Thursday) and the US Jobs data (Friday), so a fairly nimble stance is required. Today will be guided by the German CPI (provisional), the US Case Schiller House Price Index and the US Consumer Confidence, as well as further Fed speakers.
AUDUSD is back under 0.7000, hurt by poor risk sentiment, as commodity and stock prices head lower on the back of the ongoing concerns over the outlook for China.
Ahead of the Fed’s Williams, who is due to speak shortly, the Aud is at 0.6985, just above the day’s low of 0.6978. Further losses, as hinted at by the short term charts, would target 0.6945 (10 Sept low) and then last Thursday’s session low of 0.6938, ahead of a test of 0.6900. 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.
The topside will find offers at the 0.7000 pivot, ahead of the 100 HMA (0.7015) and the session high of 0.7035. Beyond this looks unlikely, although if wrong, look for an advance on Friday’s high at 0.7041 high (100 HMA), above which would meet offers at the Fibo resistance at 0.7068 (38.2% of 0.7279/0.6938). Beyond this looks unlikely for a while but further targets would be at last Thursday’s session high of 0.7089, the 200 HMA at 0.7095 and the next Fibo level at 0.7108(50%).
In the absence of any major data, look for further choppy consolidation while waiting for a lead from China on Thursday.
Jim LanglandsFX Charts
