AUD/USD: 0.7185EUR/USD: 1.0625The US$ remained underpinned on Monday and ignored the underperforming US data, with traders preferring to look towards the December Fed/ECB meetings and their diverging monetary policies. Stocks were rangebound, commodities pressured lower by the strong dollar. Today sees the German GDP and IFO, and then later, a range of US data headed by the Provisional GDP but also including Personal Consumption/Expenditure, the Case Schiller House Price Index, the Richmond Fed Mfg Index and Consumer Confidence. Elsewhere, the UK Treasury Select Committee Inflation Hearing gets underway, while the RBA Governor, Stevens will be speaking in the European session.
AUDUSD was unable to revisit Friday’s 0.7249 high, quickly reversing the strength seen into the weekend and after opening the week at the high of 0.7232 it quickly headed lower, to trade at 0.7158 before recovering some ground when the US data failed to meet expectations.
The Aud is now back at 0.7190 and it could be a fairly rangebound session, at least until the US data, given that the short term indicators are mixed, although the RBA Governor Stevens is due to speak during the European session and could try and talk the Aud lower. Note that Iron Ore fell 2%, to a 10 year low, overnight and won’t be of any assistance to the Aud.
The daily indicators still look positive so if we do head higher, then back above 0.7200 (100 DMA) would open the way to 0.7215 (minor), beyond which could see another run towards 0.7232 and potentially to Friday’s high at 0.7249. I don’t think we see it up here today unless the US dollar comes under pressure in the event of a weak US GDP reading, but beyond this would open the way to an acceleration higher, towards 0.7295 (76.4%) and to 0.7300. Beyond here seems unlikely although if wrong, the next realistic targets would be seen at 0.7363 (16 Oct high) and then at 0.7381 (12 Oct high).
If the lower commodity prices weigh on the Aud, then the session low at 0.7158 will provide the first support (0.7160: 38.2% of 0.7015/0.7249, below which, the 200 HMA is at 0.7140. Further Fibo levels come in at 0.7130 (50%), 0.7105 (61.8%) and at 0.7070 (76.4%) although it looks unlikely that we head down towards 0.7100 today.
I suspect that we are in for a choppy session, possibly confined to 0.7150/0.7220, but with the longer term strategy of selling into strength remaining the favoured play. As before, 0.700/0.7300 until the Fed meeting on Dec 16 would not surprise.
Economic data highlights will include:
Speech: RBA Governor Stevens.
Jim LanglandsFX Charts
