AUD/USD: 0.7360EUR/USD: 1.1360Given the holidays in Japan, Canada and the US today, currencies and equities have generally had a quiet, rangebound session, although the Aud and Kiwi both continued to benefit from the positive risk sentiment and maintained their recent rally. The major mover of the session was Oil, where WTI fell sharply (-4.6%) on the news that OPEC boosted production in September. Today could be a little livelier, with the Asian session seeing the China Trade Balance, the BOJ Minutes and the Australian NAB Business Conditions/Confidence. Later on, from the EU, comes the Germany CPI, HICP, German/EU ZEW Economic Sentiment Survey and the UK CPI, PPI, RPI. Things might tail off a bit in the US time zone with little to move the market, where the highlight will be the NFIB Business Optimism Index. As usual there will be a couple of Fed speakers to look out for.
After dipping to 0.7304 early in the session, AUDUSD climbed steadily higher, reaching 0.7381, before profit taking has seen a dip back to 0.7360.
Today could be another active one for the Aud, with the release of the NAB Business Confidence/Conditions (Sept) and the China Trade Balance (Sept). The previous surplus was US$ 60bio, although more likely, the interest will lie in the actual difference in the imports/exports mom. The Reuters poll is looking for a US$46.79 bio surplus this month. Exports are expected to decline by -6.3% while imports are expected to fall by -15.0%.
Having nicely met the strong resistance seen at the 100 DMA/23.6% of 0.8162/0.6900 (0.7375/0.7380), this will again be a high hurdle to overcome given the overstretched nature of the 4 hour charts. Above here though would head on to 0.7400 and then to the major descending trend resistance, currently at 0.7410, a break of which would trigger plenty of stops and could propel the Aud a fair bit higher, although at this stage this is some way off and I would be surprised to see it above here today. If wrong, the next realistic targets would be at the 11 Aug high at 0.7438 and then at 0.7485 (61.8% of 0.7848/0.6900)
To the downside, bids will arrive at 0.7345 (minor) and then at 0.7300/10 will provide, below which will see a decline towards 0.7275, the rising Fibo support, (23.6% of 0.6936/0.7345). Below this would open the way for a return to the 100 HMA at 0.7355 and then to minor support at 0.7235 and to 0.7210 (38.2%).
While the dailies still point higher, the hourly charts are showing some bearish divergence (see below), and with the 4 hour charts now overbought, further upside progress today may be tricky. As long as the dailies remain positive though, dips still provide medium term buying opportunities. On the day, I prefer to sell rallies towards 0.7380 with a SL place above 0.7410.
Economic data highlights will include:
NAB Business Confidence/Conditions (Sept), China Trade Balance.
Jim LanglandsFX Charts
