AUD/USD: 0.7210EUR/USD: 1.1015Oil headed lower today after some dovish comments from Saudi Arabia, denying any chance of production cuts, dragging stocks with it and igniting a day of risk aversion with traders running for cover and renewing demand for the safe haven assets such as Gold, Yen and Swiss Franc. The volatility look set to continue in all markets, and as far as the currencies are concerned, Sterling in particular is sitting on the edge of strong support (1.4000), a break of which could see a much deeper decline. It will be another session of watching how oil trades, and its flow on effect on stock markets, with everything else following in the wake of what happens there. Today is rather thin as far as data is concerned. The focus though will be on the US Flash Services/Composite PMIs, the New Home Sales and the EIA Crude Oil Stocks Weekly Change.
AUDUSD squeezed up to 0.7258 on Tuesday, the highest level since Jan 3 before succumbing to the risk-off mood caused by the lower oil/stock markets, and is now at 0.7210 after a dip to 0.7200. Overall the Aud$ has performed reasonably well given the moves seen elsewhere, especially in the Yen.
AudUsd will derive direction today from the Q4 Wage Price Index and the Q4 Construction Work Done, which could provide some minor movement although it will be another day of watching stocks and commodity prices for much of the session. Tomorrow sees the release of the Q4 Capex figures which are expected to be pretty poor and could provide a bit of a hurdle for the Aud ahead of their release.
The charts look rather mixed, but the dailies remain positive, so if 0.7258 is successfully taken out, look for a move towards 0.7280 and to 0.7300. Beyond there would look to retest the 31 Dec high at 0.7327 although I am not sure that we get there in the short term.
Buyers will again be seen at 0.7200 and then at 0.7185 (minor), ahead of 0.7145 (200 HMA) and the 0.7135 Monday session low, although this looks rather unlikely to be seen again today. If wrong, look for a run back to 0.7100 and below that to the 19 Feb low at 0.7068.
Economic data highlights will include:
Wage Price Index, Construction Work Done.
Jim LanglandsFX Charts
