AUD/USD: 0.7345EUR/USD: 1.0950The ECB eased policy to a lesser degree than had been hoped for on Thursday, disappointing markets and causing a large squeeze in the overcrowded short-Euro trade, taking the Chf and Cable along for the ride. Equities did not like the outcome either and have seen a decent sized selloff, with the chance of more to come. Today will be another volatile day with the US employment data to drive direction and which will provide a further hint as to whether the Fed are likely to raise rates at the Dec 16 meeting. Janet Yellen, in her testimony to Congress, today said nothing to suggest that the recent rhetoric pointing towards a rate hike has changed. I think they will hike unless today’s NFP reading is considerably weaker than the expected +200K, which would put some doubt into traders’ minds and would further undermine the dollar.
The Aud has been choppy cut largely left on the sidelines today, with all the action going on around it in the EU majors, having traded within a relatively tight 0.7283/0.7350.
We could be in for a more directional move today as, ahead of tonight’s US Jobs data, the October domestic Retail Sales are due (exp +0.3%mm).
0.7350 remains strong resistance, but the short term indicators look positive, and beyond this would open the way towards 0.7363 (15 Oct high) and then to 0.7382 (12 Oct high & 38.2% of 0.8162/0.6900). Beyond there would put pressure on 0.7400 and possibly on 0.7438 (11 Aug high) and the 200 DMA at 0.7455.
Bids will arrive at 0.7300 ahead of the session low at 0.7283 (25 Nov high). Below this would then allow a revisit of 0.7256 (23.6% of 0.7015/0.7332), 0.7250 (200 HMA) and 0.7210 (38.2%).
While the charts are mixed, the dailies do point to a test of the topside so a run towards 0.7400 would not surprise but it could be a wild ride, particularly after the US data.
Economic data highlights will include:
Retail Sales.
Jim LanglandsFX Charts
