AUD/USD: 0.7215EUR/USD: 1.1015Stocks soared and the US dollar remained underpinned on Friday in the wake of last week's central bank activity, most notably from the ECB, the PBoC and the BOC. It could be a similar story this week with Interest Rate Decisions due from the FOMC (Wed), the RBNZ (Thur) and the BOJ (Fri). There will be plenty of other major data due as well (highlights being: UK GDP, US Durable Goods Orders, Consumer Confidence (Tue), Australian CPI (Wed), German CPI, Unemployment, US GDP (Thur) and Japan CPI, EU CPI (Fri)), but starting today with the German IFO Business Climate/Expectations, US New Home Sales, and the Dallas Fed Mfg Business Climate. All up a busy week lies ahead. Today is a NZ holiday, and note that BST has now finished in the UK.
The Aud had a volatile day on Friday in initially running higher from an early low of 0.7197 to reach a high of 0.7297, on the back of the Chinese rate cut, before heading lower again once the US dollar took on a broadly bid tone, which helped commodities slide from day's highs, pressing the Aud lower. It finished back at 0.7220 and appears set to continue its choppy sideways trade in the 0.7000/0.7300 area for the next few days at least, and possibly longer.
The charts are offering little hint in either direction, but the Chinese rate cut should provide some underlying support for the Aud early in the week, and any potential downside momentum looks likely to be slow unless the US dollar takes another quantum leap higher. I think this is doubtful, and thus the initial bids will be seen close-by at 0.7200 but a break of which would then head towards 0.7160 (50 % pivot of 0.6936/0.7381) and possibly to 0.7106 (61.8%) and to 0.7040 (76.4%).
To the topside, the initial targets will be at 0.7240/0.7260 (100/200 HMAs), above which would then open the way to Friday’s high at 0.7297. Above 0.7300 seems unlikely today, in the absence of any data, but if wrong look for a run up towards 0.7310 (minor) and possibly to the 100 DMA at 0.7330, the descending trend resistance at 0.7350 and to 15 Oct high at 0.7361.
Overall, look for more choppy trade today using 0.7180/0.7280 as a rough guide.
Economic data highlights will include:
M:
T:
W: CPI, RBA Annual Report
T: HIA New Home Sales, Import/Export Price Index
F: Private Sector Credit, PPI..
Jim LanglandsFX Charts
