AUD/USD: 0.6985
EUR/USD: 1.1255
It has been another volatile session in the stock markets, which have recovered after an early session selloff. Commodity giant, Glencore was again in focus, after yesterday diving by 30%, by regaining 17% of those losses after insisting its business remains operationally and financially robust. Not a trade for the feint hearted! The dollar was mixed and choppy, trading under some mild pressure whilst awaiting the important data from China/US due tomorrow/Friday. More volatile trade looks likely but for any directional movement we may need to wait until later in the week. Today's focus will be on the German Retail Sales, German/EU Unemployment, EU CPI (provisional), ADP Unemployment, Speeches Fed’s Dudley/Yellen, and Chicago Purchasing Managers Index. Expect some quarter-end book squaring.
The Aud, after having sunk to a low of 0.6936 as weak commodity prices piled on the downside pressure, has managed to squeeze back to finish the US session at 0.6985, recovering in tandem with the bounce in the US equity markets.
Today sees some secondary Aud data (Private Sector Credit, Building Permits, PPI), although the ever-changing winds of risk sentiment and tomorrow's Chinese Manufacturing PMIs are likely to keep the Aud in check today.
The points to watch remain pretty much unchanged, and with the short term momentum indicators looking neutral to mildly positive, another choppy day of trade near 0.7000 would not surprise while waiting for the important China/US data (Thur/Fr) as well as the domestic Retail Sales, due Friday.
Bids will arrive today at 0.6950 and then at the 0.6936 session low. Below here would open up 0.6900, below which there is little support until the April 2009 low at 0.6855. Anywhere down here looks unlikely to be seen in the coming session but beneath 0.6855 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 again find offers at the 0.7000 pivot, ahead of the session high of 0.7203 and the previous day's high at 0.70355. Beyond this looks unlikely, although if wrong, look for an advance on Friday’s high at 0.7041 high, above which would run into offers at the Fibo resistance at 0.7065 (38.2% of 0.7279/0.6938/200 HMA). 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%).
Look for another choppy session of trade near 0.7000, while waiting for tomorrow's China PMI. Keep an eye on the Chinese equity markets as another spill would see the Aud come under pressure for a possible test of 0.6900 although I think this unlikely today.
Economic data highlights will include:
Private Sector Credit, Building Permits, PPI.
Jim Langlands
FX Charts
