AUD/USD: 0.7100EUR/USD: 1.0685U.S. and European equity markets made gains and the US$ remained firm, as the markets came to the conclusion that the economic impact of the attacks in Paris would be limited. More in focus is the growing possibility of a December rate hike from the Fed, which is keeping the dollar underpinned and will probably continue to do so in the days ahead. We will get further hints on the timing of any rate hike today, with a busy session of US data, which will include the CPI, Capacity Utilisation, Industrial Production, NAHB Housing Market Index and a speech from the Fed’s Tarullo. Ahead of that, the RBA Minutes are due, as is the RBNZ Inflation Expectation. Later on, the German/EU ZEW Economic Sentiment Survey will be released and it will be a busy session in the UK with the CPI, PPI, RPI and the Inflation Hearing all due.
AUDUSD is under some mild pressure on Monday (0.7080/0.7031) pretty much in line with the other majors against the generally firm US dollar but currently sits close to 0.7100, right on the crossing 100/200 HMAs with not too much damage done.
The RBA Minutes will be today’s focus although they are unlikely to contain too many surprises. They are likely to contain further mentions of the slowing economy in China and some relief at the easing of the upwards pressure on the housing markets. A fairly neutral bias is likely. Also speaking will be the RBA’s Kent.
Technically the medium term picture remains unchanged.
A break below 0.7080 could open the way to further declines towards 0.7065 (minor), 0.7050 and to the 0.7015/20 area which has recently provided decent support. Below there, further bids will arrive at 0.7012 (76.4% of 0.6900/0.7381) and then 0.7000. A break of this would then open the way for a steeper decline towards 0.6936 (29 Sept low) and to 0.6900 (4 Sept low) although at this stage this seems unlikely to be seen for a while.
A short squeeze beyond today’s session high of 0.7032 seems rather unlikely today, but if wrong we could see a run towards Friday’s high (0.7158), above which would see a sustained break the minor descending trend resistance and could then see a move towards 0.7195 (50% of 0.7381/0.7015). Above 0.7200 would head on towards 0.7210 (descending trend resistance), 0.7223 (4 Nov high) and to 0.7240 (61.8%) but seems unlikely to be seen for a while.
More choppy trade, with a mild downside bias remains the preferred outlook, but not going anywhere too far today.
Economic data highlights will include:
RBA Minutes, Speech: RBA Governor Kent
Jim LanglandsFX Charts
