AUD/USD: 0.7190EUR/USD: 1.1040The US dollar is mixed and generally rangebound today as traders stand aside while waiting on the outcome of the FOMC meeting due late in Wednesday’s session (early Thursday; Asia). Yen strength was the most notable trade, coming ahead of Friday’s BOJ meeting, with a general feeling that the BOJ will sit on their hands rather than ease monetary policy as has been increasingly hoped for. WTI has been the major mover of the day, bringing the commodity currencies a little lower as well, falling almost 2% on the news that the US Govt will begin to offload some of its strategic reserve inventory. Ahead of the FOMC, the main interest in Asia will be the Japanese Retail Sales and the Australian CPI. From Europe we get the German Consumer Confidence but that is about it.
AUDUSDAUDUSD reached a high of 0.7257 in European trade, but it reversed from there and a steady slide has since seen it trade to a low of 0.7178, not helped by a decline in commodity prices, but with traders also looking ahead at today’s Australian Q3 CPI data which is expected to be rather benign (exp 0.6%qq, 1.7%yy; Trimmed Mean, 0.5%qq, 2.4%yy). A weak result would put the pressure back to the downside for the Aud as it will increase the speculation of another RBA rate cut, although at this stage this would appear unlikely.
Technically, we are trading just above the top of the daily cloud, although the session low has already pierced it. If the CPI comes in beneath expectations, expect further falls towards 0.7160 (50 % pivot of 0.6936/0.7381/Daily Kijun/55 DMA) and possibly to 0.7106 (61.8%) and eventually to 0.7040 (76.4%).
A firm CPI today would have the yield players looking to buy the Aud, in expectation of little action from the Fed at the FOMC Meeting, with even a December rate hike being questioned in some parts. Back above 0.7200, would find sellers at the 100/200 HMAs at 0.7230/0.7255 respectively. Above the session high (0.7257) would then head on towards last 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.
With the 1 &4 hour charts both pointing lower, coming into line with the negative look on the daily charts, it would appear that it will be the downside that is going to be the direction to watch today.
Economic data highlights will include:
CPI, RBA Annual Report.
Jim LanglandsFX Charts
