AUD/USD: 0.7065EUR/USD: 1.1300It has been another session dominated by the flows in risk sentiment. The steep decline in the Nikkei on Tuesday, and then later in the oil price, has led to a move out of risk associated assets and into the safe haven of the Yen and the Chf, putting the US$ and the commodity bloc currencies under pressure. A partial recovery in US stocks later in the session has taken some of the pressure off although the markets remain extremely nervous. Today will be all about Janet Yellen who will testify to the House Financial Services Committee, with the market likely to react vigorously, one way or the other, to her comments. Before then, Australia gets the Consumer Confidence and the New Home Sales figures, while the UK has the Manufacturing Production and the NIESR GDP Estimate to contend with. The European Commission will release their Economic Growth Forecast, but it is all going to be about the Fed.
AUDUSD had a rocky ride on Tuesday, falling hard from around 0.7050 to a low of 0.6973 in the US session, led lower by the selloff in commodities, particularly in the price of oil, and stop-loss selling in AudJpy, before turning sharply higher, briefly reaching 0.7095, underpinned by the recovery in US stocks.
Asia is going to be thin again because of the absence of China, Singapore and HK, and traders will look towards the US session for guidance when Janet Yellen testifies. Before then WBC Consumer Confidence and the New Home Sales figures for January will be the event risk to watch.
The charts are mixed and more choppy trade would seem to lie ahead today. On the topside, the 100/200 HMAs lie immediately ahead, at 0.7095 and 0.7125, which may cap further strength, but beyond which would then look towards 0.7150 and potentially back to 0.7200.
If the Aud turns lower, we would find minor support at 0.7020 and again at 0.7000 ahead of the session low at 0.6973. Below here seems unlikely today unless there is another steep selloff in the commodity/energy sector, but further targets would then be at 0.6925 (76.4% of 0.6826/0.7240 ) and then to 0.6900 and lower, towards the trend low at 0.6826.
Looking to sell rallies remains the overall theme, but a choppy session may lie ahead today.
Economic data highlights will include:
China NY Holiday, WBC Consumer Confidence, New Home Sales.
Jim LanglandsFX Charts
