AUD/USD: 0.7050EUR/USD: 1.0760Currencies have been relatively steady on Monday, digesting Friday’s US Jobs data. At the same time, the equity markets fell sharply ahead of what looks almost certain to be a December rate hike from the Fed. Today will be rather thin on economic data from either the EU or the US, although from Asia we get the Chinese CPI, PPI and New Loans. From Australia, the NAB Business Conditions/Confidence and Home Loan data are due. Later on, Cable will look to the Inflation Report Hearings for direction.
AUDUSD traded within a fairly tight 0.7022/0.7070 range to start the week, finishing roughly in the middle, at 0.7050.
Today may be a little more lively, with economic data to come, both domestically (Investment Lending for Homes, Home Loans, NAB Business Conditions/Confidence) and also from China (CPI, PPI, New Loans). Further slowing in the Chinese inflation rate (exp 1.5% yy) in particular, could keep the pressure on the Aud in the coming session.
Technically the outlook remains unchanged. There is now a minor double bottom at 0.7020 (Friday/Monday lows), below which would test 0.7012 (76.4% of 0.6900/0.7381) and then 0.7000, where the minor rising trend support now sits. A break of this would allow a return to 0.6936 (29 Sept low) and to 0.6900 (4 Sept low).
A rally could see another minor short squeeze towards 0.7070, (which would take us back above the base of the daily cloud (0.7060)), above which would then see some acceleration towards 0.7105 (23.6% of 0.7382/0.7022), although if so this would appear to be a good medium term sell opportunity. Above here looks unlikely, but further offers would arrive at 0.7125 (200/100 HMAs).
As before, I prefer to play it from the short side, but we need to leave room for a squeeze towards 0.7100. Stops need to be above 0.7130, or ideally above the minor descending trend resistance, currently at 0.7180.
Economic data highlights will include:
Investment Lending for Homes, Home Loans, NAB Business Conditions/Confidence, China CPI, PPI, New Loans.
Jim LanglandsFX Charts
