AUD/USD: 0.6990EUR/USD: 1.0850Most financial markets have been rather rangebound on Tuesday after the Chinese markets stabilised, which has seen an improvement in risk sentiment. On the other hand, oil fell heavily again today, with WTI briefly trading below $30pb, and Sterling, which dived lower after some fairly awful manufacturing/production data. Today will be another one of China watching, with the Chinese Trade Balance being the highlight in Asia. Beyond that, Europe gets the EU Industrial Production data and then from the US we get the Beige Book and a couple of Fed speakers. President Obama will be delivering the State of the Union address during the Asian session (1.00pm AET) and so liquidity/activity is likely to be subdued until then.
AUDUS had a choppy range of 0.6935/0.7020, but is now little changed on yesterday, leaving the bigger picture unchanged.
In the absence of any domestic data today the focus will be on the China Trade Balance (exp +53 bio; Exports -8%. Imports - 11.5%), which could produce a directional move if too far from expectations. Otherwise, keep an eye on Chinese stocks – as usual – for the varying flows in risk sentiment.
As mentioned previously, the 4 hourlies are still pointing higher as they recover from having become oversold, and it may be that the downside remains somewhat limited in the near term. If we do head higher, minor resistance arrives at 0.7000 and again at the session highs of 0.7020 (today) and at 0.7035 (Monday) and then at 0.7078 (23.6% of 0.7327/0.6926/ Friday high; 0.7076). Beyond there could see a run to 0.7100 although this looks doubtful for the time being.
Another selloff in the Chinese markets would see the Aud retest the session lows of 0.6940 and Monday’s low of 0.6926, below which would then open the way to the trend low of 0.6900 (4 Sep). Note that there is little to underpin the Aud under 0.6900 and the next meaningful support would not be seen until 0.6769 (March 2009 low).
The dailies remain negative, and eventually I would expect to see levels substantially below 0.6900. Selling rallies remains the preferred strategy.
Economic data highlights will include:
China Trade Balance.
Jim LanglandsFX Charts
