AUD/USD: 0.7050EUR/USD: 1.0910The currencies have generally had another rangebound session, with the main action again being seen in stocks and oil, both of which have suffered sharp losses. Today will look to the Services and Composite PMIs for direction, with the EU Retail Sales and the US ADP Jobs data also coming up. Markets will now be looking towards Friday’s Jobs/NFP/Average Hourly Earnings data, so another choppy but rather directionless day seems likely, at least for the FX markets
AUDUSD is a little heavy today, after the RBA left rates unchanged, and not helped by the selloff of risk assets during the US session. However, it currently remains above the rising trend support at 0.7040, after earlier having made a failed attempt to overcome the resistance at 0.7140 by trading up to a session high at 0.7128.
Today will see some action, beginning with the domestic Services PMI, the December Trade Balance and the Building Permits. Later on, the Caixin Services PMI will be released, with a soft reading of sub 50.0 (exp 50.5) likely to place further downward pressure on the Aud.
The rising trend support at 0.7040 is under pressure, but is backed up by the 200 HMA at 0.7033 and the Fibo support at 0.7020 (38.2% of 0.6826/0.7140. Below there, we may be in for a more concerted test of 0.7000, a break of which would then open the way to 0.6983 (50% of 0.6826/0.7140) and even 0.6946 (61.8%), although this seems unlikely today. If wrong, look for a return to 26 Jan low at 0.6918 and then to 0.6900 (76.4% of 0.6826/0.7140).
Any rally will run into the 100 HMA at 0.7060, above which would allow a return to 0.7100 and then to the session high of 0.7128 although this currently seems unlikely. If wrong, look for a run to towards Friday’s 0.7140 high, which will be a tough nut to crack, (this being both the 55 and 100 DMAs as well as being 23.6% of 0.8162/0.6826), so if we do head higher, do not expect this area to give way easily. Beyond there would trigger stops and could see the Aud head towards 0.7155 and 0.7180 (both minor), ahead of 0.7200/10 (0.7200; daily cloud base, 0.7208; 76.4% of 0.7327/0.6826).
The momentum indicators look mixed, but with the dailies still pointing higher, cautiously buying dips still seems to be the plan, although having said that, if risk assets continue to decline in sympathy with the declining oil price, the Aud is going to find any upside potential very limited.
Economic data highlights will include:
AIG Performance of Services Index, Building Permits, Trade Balance, China Leading Economic Index, Caixin China Services PMI.
Jim LanglandsFX Charts
