AUD/USD: 0.7240EUR/USD: 1.1000It has been a rocky ride on Monday, led by swings in the price of oil which traded down towards 2009 lows, before a strong bounce that also saw stocks recover from their own trend lows. The US$ had a choppy session, mostly under pressure in early Europe/US trade but recovering late in the day as risk sentiment seemed to improve somewhat as oil recovered. Today will see the US and the UK CPI data, along with the German/EU ZEW Economic Sentiment Survey which may combine to provide some volatility, although ahead of the FOMC meeting on Wednesday, any directional moves look a little unlikely. Australia will get the RBA Minutes and the MYEFO, which could keep the currency under some pressure. Elsewhere it will be fairly thin on the ground with regards to data and many traders will now be sitting on their hands ahead of Wednesday.
AUDUSD had a mostly positive session in squeezing up to 0.7270, after recovering from an early fall to a low to 0.7160. The soft US$ helped it to head higher in European/US trade before a minor reversal that has pushed the Aud back to 0.7245 by the close.
The property lending and vehicle data lie ahead today, as well as the RBA Minutes. These seem unlikely to cause any great excitement given that the RBA Governor, Stevens has already indicated that interest rates will not change, at least until the next meeting which is not until February. The Federal Government’s Mid-Year Economic and Fiscal Outlook (MYEFO) is also due and which will point to a rather dour outlook for the economy and could help cap the Aud. Lower Commodity prices, higher debt levels and deteriorating terms of trade do not paint a picture for a higher currency.
Technically though, the Aud currently looks reasonably healthy. Back above the session high would open the way towards 0.7292 (76.4% of 0.7333/0.7160) and then, above 0.7300, back to last week’s spike high of 0.7333, seen after last week’s jobs data.
If the Aud does head lower the first support lies nearby, where the 100 HMA is at 0.7230, below which would see a move back to 0.7200 and then to the session low of 0.7160, below which 0.7155 (61.8% of 0.7015/0.7385) will provide support. Below 0.7150 would then open the way for a steeper fall to 0.7100 (76.4%) and to 0.7070 (18 Nov low), albeit that this looks some way off at this stage.
Although the short term technicals do look positive, I still prefer to use this area to sell into, looking for another run to the downside.
Economic data highlights will include:
Investment Lending for Homes, Home Loans, New Vehicle Sales, RBA Minutes, MYEFO.
Jim LanglandsFX Charts
