AUD/USD: 0.7140EUR/USD: 1.0880Currency markets have been choppy and rather mixed on Monday. The Euro and the Chf are heavy following another weak EU CPI reading, while Cable is bit higher following some month-end demand, giving it a reprieve after it made another 7 year low against the dollar. The Kiwi started the week on a soft note after some poor data, but both it and the Aud received a mild boost from the PBOC decision to ease the RRR by 0.5%. The Yen was in safe-haven mode following the limp communiqué from the G20, while the US$ was all a bit mixed up in the middle after some soft US data. Today is going to be busy, particularly for the Aud, which has the Building Permits, Current Account and the China Mfg/Non-Mfg PMIs to contend with, ahead of the RBA decision (No change expected - although the statement seems likely to be dovish). Elsewhere, the global manufacturing PMIs, including the US ISM will be due today, as will the German Unemployment figures. Kiwi traders should look out for the Global Dairy Trade Index due in late European trade.
AUDUSD has traded a relatively tight range on Monday and after holding on above 0.7100 (low: 0.7108) it managed to squeeze up to a high of 0.7167 when China’s PBOC lowered the RRR by -0.5%. ]
Today will focus on the RBA who will make their Interest Rate Decision. No change is expected this month and the interest is likely to lie in the wording of the statement. A dovish leaning would keep the Aud under further downside pressure. Ahead of the RBA, the local Building Permits and Current Account are due, while from China comes the Caixin China Flash Manufacturing and the China Official Non-Mfg PMI, which, if soft will also help to keep the Aud under pressure. Today's data filled session comes ahead of further busy sessions over the rest of the week, as Wednesday sees the Q4 GDP, while on Thursday it will be the turn of the Trade Balance, and then Friday sees the January Retail Sales, although any major directional move is likely to be dominated by the US Jobs numbers.
Technically the Aud looks a bit heavy and if the RBA are dovish we should expect a test of the session low and of 0.7100, below which would open the way to the 19 Feb low at 0.7068 and on towards 0.7040 (50% pivot of 0.6826/0.7258) and then to 0.7000 (0.6992: 61.8% of 0.6826/0.7258).
Further out, below 0.7000 would then open the way towards a deeper decline towards 0.6930(76.4% of 0.6826/0.7240), to 0.6918 (26 Jan low) and then to 0.6900 and lower, towards the trend low at 0.6826.
If the RBA are upbeat, resistance will be seen at the 0.7167 session high, beyond which the 100/200 HMAs lie at 0.7170 and 0.7180 and come ahead of 0.7200. Above here seems unlikely today, but further gains could see a run towards 0.7230 and potentially back to 0.7255/60. The 200 DMA is currently at 0.7265 and we have not been above there since 10 Sept 2014, so a break of this, if and when we see it, could spark quite a rally although it does not seem likely to be bothered early in the coming week, but worth watching.
Selling rallies seems to be the plan.
Economic data highlights will include:
AIG Performance of Mfg Index, Building Permits, RBA Interest Rate Decision/Statement, Caixin China Flash Manufacturing, China Official Non Mfg PM
Jim LanglandsFX Charts
