AUD/USD: 0.6860EUR/USD: 1.0900Markets have generally been quiet and rangebound due to the US holiday, and currencies, equities and commodities are mostly pretty much where they ended the previous week. It will liven up later on today though, with some major economic figures due, particularly from China, where the GDP, Retail Sales and the Industrial Production will all be released. Later on sees the German/EU CPI figures and also the German/EU ZEW Economic Sentiment Survey, although there is little from the US to move the markets. Before any of that, the NZ Business Confidence is up shortly. It should be a busy one, with the focus on the Chinese data, stock markets and on the Yuan fixing.
After an early move to the downside in reaching 0.6832, AudUsd then reversed direction to see the Aud squeeze up to a high of 0.6927 as Chinese stock markets stabilised, prior to another reversal that has seen the Aud drift slowly lower, to finish the day at 0.6850.
Today’s focus will again be on Chine, where the market expectations are for: Q4 GDP: +6.8% yy, +1.7% qq, Retail Sales: +11.3%yy, Industrial Production: +6% yy, Urban Investment: +10.2%yy.
If the China GDP fails to meet expectations it could be that we see the trend low of 0.6826 retested, below which would then head to 0.6800 (minor) and on to 0.6769 (29 March 2009 low). This should be strong, but a break of which would open the way towards much lower levels, with little support seen until the 15 Mar 2009 low at 0.6527 and then to the 1 March 09 low at 0.6284. Things could potentially begin to accelerate very quickly on the downside so will be worth watching very closely, with much depending on China, and today is going to be important.
A firm result from the Chinese data could then bring about another run back to 0.6900 and to the 0.6923 session high. Above here seems a little unlikely, but if wrong, look for further gains towards 0.6945 (23.6% of 0.7327/0.6826), to the 200 HMA at 0.6975 and to the minor trend resistance at 0.7000 although this seems highly unlikely.
The shorter term charts look rather uncertain, so a near-term a topside squeeze is possible, but overall, the medium perm players will be looking for levels to sell into, so any potential strength in the Aud would appear to be temporary and a stronger test of 0.6800 and lower would seem to lie ahead.
Economic data highlights will include:
China Retail Sales, Industrial Production, GDP, Urban Investment.
Jim LanglandsFX Charts
