AUD/USD: 0.7135EUR/USD: 1.1020While equities have had a solid session, currencies have been generally rangebound today, waiting on Friday’s US Jobs data. This looks set to remain the case for the coming session given the lack of data to be seen from the EU or the US (Factory Orders, Total Vehicle Sales ), although Mario Draghi will be speaking late in the day (European Cultural Day) and could cause some volatility for the Euro if he mentions monetary policy. Before then, the main action will be seen via the RBA meeting, which appears to be a 50/50 vote as to whether we are likely to see a rate cut or not. The UK Construction PMI and the NZ Global Dairy Trade Index will also be released later in session. It is a Japan holiday.
AUDUSD ended a tight 0.7112/0.7152 range in consolidating ahead of the outcome of the RBA Meeting, with the odds of a cut seemingly at 50/50.
The chances seem to be that the RBA will sit on their hands, although it is a very close call, while waiting to see what the other major central banks decide to do in December. Having said that, by the time that the Fed/ECB do meet in December, the next chance for the RBA to act would be at heir February meeting (no meeting is held in January). While I suspect that they will stay on hold today (although it is a very close call), further soft Australian data could well bring about a December cut.
In the event that the RBA do cut today, then the initial bids at 0.7100 would quickly be taken out as the Aud heads towards 0.7080 and 0.7065 (29 Oct low). Below this, look for further support to be tested at 0.7040 (76.4% of 0.6936/0.7381), at 0.7012 (76.4% of 0.6900/0.7381), and then at 0.7000. Further out, rising trend support sits at 0.6990, a break of which will return to 0.6936 (29 Sept low) and to 0.6900 (4 Sept low).
On the other side of the coin, no rate cut could result in a quick squeeze higher although, with more interest being on the Melbourne Cup, interest will be minimal, but above 0.7150 would potentially see a run up to 0.7180 and on to 0.7200/05. I would doubt that we head above here in the short term, but if wrong, further advances could take the Aud back towards the descending trend resistance, currently seen at 0.7300.
Economic data highlights will include:
RBA Interest Rate Decision, Statement.
Jim LanglandsFX Charts
