AUD/USD: 0.7455EUR/USD: 1.1000Tuesday’s soft Chinese trade balance, with a collapse in both imports and exports dominated the day’s trading pattern, halting the rallies in stocks and oil and underpinning demand for the Yen as a safe haven currency. The FX markets have been choppy but generally directionless while traders wait for tomorrow’s ECB Meeting. Today should be relatively quiet in the absence of any major data as traders stand aside ahead of the ECB although Australia will get some direction from the WBC Consumer Confidence and Home Loans data, and then the UK sees the Industrial and Manufacturing figures for Feb, and the 3 month NIESR GDP Estimate. That aside it looks like being a choppy, sideways day.
After reaching a new 8 month high of 0.7485 on Monday it was generally a session for risk aversion in Asia yesterday after the poor Chinese Trade Balance (Exports: -25.4% yy, Imports: -13.8% yy). AudUsd headed back down from an early high of 0.7470 to a low of 0.7410, before a recovery back to the 0.7470 highs, based largely on the diminishing chances of any rate cut from the RBA due to the recovery in commodity prices. Currently the Aud sits unchanged from this time yesterday, at 0.7455.
Wednesday’s data will come via the WBC Consumer Confidence and the Home Loan data, but direction is more likely to come from the winds of risk sentiment and any moves n commodity prices.
It looks like being another day of consolidation near trend highs, but with the topside momentum looking likely to be capped by the overbought condition of the shorter term charts. The dailies still look positive though, so if upside progress can be made then look for a move above 0.7470 and on to Monday’s high of 0.7485 and then to the Fibo resistance at 0.7493 (50% pivot of 0.8162/0.6826). A break of this level, and then of 0.7500, would target 0.7532 (2 April 2015 low) and then the May/June 2015 double bottom lows at 0.7597. Beyond there lies the next Fibo resistance at 0.7648 (61.8% of 0.8162/0.6826) but is currently a long way off at this stage. In the longer term, the next major Fibo level is at 0.7845: 38.2% of 0.9504/0.6826)
A failure at the current levels would head back to the initial support, seen at the minor rising trend support currently at around 0.7445 and then at 0.7410 below which would find further buyers at 0.7395/0.7400, which should be decent support (0.7395: 23.6% of 0.7108/0.7470) but which looks unlikely to be tested today. If wrong, look for further weakness towards 0.7375 (minor) and then to 0.0.7340 (38.2%), to 0.7325 (23.6% of 0.6826/0.7470) and to 0.7300.
Economic data highlights will include:
WBC Consumer Confidence, Investment Lending for Homes, Home Loans.
Jim LanglandsFX Charts
