AUD/USD: 0.7110EUR/USD: 1.0920Interest rates in the US remain on hold following today’s FOMC Meeting, as expected, but the Fed surprised the market by indicating that a December rate hike is firmly on the cards. Having been under pressure for much of the session, on expectations of a more dovish outlook, the dollar has since reversed its direction and has headed sharply higher. Commodities had the opposite reaction, heading higher ahead of the announcement only to give up all of those gains following the statement. Equities remain firm. The RBNZ have also left rates unchanged at their monthly meeting. Today will again be busy, with the highlight being the Q3 US GDP. Elsewhere, there will be plenty to look out for, starting in Asia with the Japanese Industrial Production, Foreign Bond/Stocks Investment and the Australian New Home Sales. Later on we get the ECB Economic Growth Forecasts, German CPI, Unemployment, Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate US Jobless Claims, GDP (Provisional-Q3, US Personal Consumption/ Expenditure (Provisional-Q3), Pending Home Sales, Fed’s Lockhart Speech. Stay alert!
The benign inflation data yesterday dented any upside hope for the Aud, although after a falling to support at 0.7110 it then squeezed back to 0.7158 prior to the FOMC announcement, since when, it has seen another sharp decline, so far to a low of 0.7080.
Currently back at 0.7110, today will be spent soaking up the results from the Fed and the RBNZ although locally, the New Home Sales will be the focus.
With both the 4 hour and daily charts pointing lower, the downside will still seem to be favoured, where below 0.7080, the points to watch will be at 0.7040 (76.4% of 0.6936/0.7381) and then at 0.7012 (76.4% of 0.6900/0.7381) and 0.7000. Below here seems unlikely today, but further out, rising trend support sits at 0.6985, a break of which will return to 0.6936 (29 Sept low) and 0.6900 (4 Sept low).
A reversal to the topside, which seems a little unlikely aside from the odd profit taking short squeeze would see offers at 0.7110 (minor) 0.7150/60 and then at the session high of 0.7206.
An RBA rate cut, at next Tuesday’s meeting, is now being more aggressively priced into the market, which should keep the pressure on the downside so selling rallies remains favoured.
Economic data highlights will include:
HIA New Home Sales, Import/Export Price Index.
Jim LanglandsFX Charts
