AUD/USD: 0.7095EUR/USD: 1.1325It has been another big day in the markets with conditions being highly volatile, led by demand of safe haven assets, with Gold and the Yen again being in the spotlight. It may well be another rocky ride ahead, especially given that US stocks remain under heavy pressure, although we did see a partial recovery late in the day, but which may impact on the Asian markets, which also look very precarious. In economic terms It is going to be busy, starting with the RBA Governor, Glenn Stevens, testifying to the House of Reps Economics Committee and to be followed later in the day by the release of the German CPI (Jan), Q4 German/EU Provisional GDP, US Retail Sales and the Rts/Michigan Consumer Sentiment Index. Be nimble! Have a good weekend.
Risk associated assets were hit hard in early Europe as traders heavily sold the stock markets. AudUsd was no exception and fell quickly from above 0.7100 to a low of 0.6983, with the price action not helped by heavy selling in AudJpy, which drove the cross down from 80.85 to a session low of 77.57, also within the hour of Europe getting under way.
US$Jpy and the Yen crosses then saw a strong bounce, which has since underpinned the Aud and allowed a strong recovery back to 0.7100 in highly volatile trade.
The RBA Governor Stevens, will be testifying before the House of Representatives' Standing Committee on Economics this morning, although that is about it in terms of data and it will be mostly down to watching Asian stocks and then, later on, the EU/US data for direction. Stevens will be reasonably happy with the Australian economic figures, but will again emphasize the risks in global markets and may use his speech to talk down the Aud.
Technically, further gains could take the Aud on, above 0.7100, towards 0.7120 (minor) and then to the session high of 0.7152, seen early in yesterday’s Asian session. Beyond there would take a look at 0.7177 (76.4% of 0.7241/0.6972) and potentially 0.7200 and the trend high at 0.7241 (4 Feb), albeit not today I suspect.
If Asian stocks face a heavy selloff, which given the tough week in the US indices is very possible, then it will be the downside that reasserts itself as far as the Aud is concerned. In that case look for a return to 0.7040 and 0.7000 (both minor) ahead of the session low at 0.6983 and the Wednesday low at 0.6972.
Further out, beyond there would target 0.6925 (76.4% of 0.6826/0.7240) and 0.6900 and lower, towards the trend low at 0.6826.
Economic data highlights will include:
RBA Governor Stevens Speech
Jim LanglandsFX Charts
