AUD/USD: 0.7485EUR/USD: 1.1005The Aud$ was the big winner in the currency markets on Wednesday and is now at 9 month highs after latching on to the 4 % rally in the price of oil. The other mover in the currency markets has been the Yen, which reversed some of the previous day’s strength in line with today’s improved risk sentiment, brought about by the oil price rise. Otherwise it has been fairly choppy as the market begins to focus on today’s ECB Meeting, where a 10bp cut to the discount rate and an increase in the monthly QE programme is widely expected. Before then the RBNZ Meeting is due shortly. No change is expected and it will be the wording of the statement and the RBNZ Governor’s Press Conference that traders will look to for guidance. Later in the Asian session the China February CPI, PPI and the New Loans data will be released. Also in Asia, Australia gets the Consumer Inflation Expectation, while later on, the German Retail Sales and the US weekly Jobless Claims will be released. All eyes though will be on Mario Draghi for his take on the EU economic outlook.
AudUsd had another strong session, today rallying to reach 0.7527, assisted by the improved risk sentiment on the back of a strong rally in the oil price. At the end of the US session the Aud is sitting at 0.7485 after the surprise rate cut by the RBNZ which has sent the Kiwi lower.
Australia gets the Consumer Inflation Expectation today although most of the Asian focus, following on from the RBNZ Interest Rate Decision, will be on China which will release the February CPI (exp 1.1%mm, 1.9%yy) as well as the PPI (exp -4.9%yy) and the New Loans data for February. Later on, following the ECB announcement, the crosses will come into play and will ensure the Aus remains very active. An easing by the ECB would probably see renewed demand for the Aud, as selling of EurAud sets in.
Technically, above the session high 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. In the longer term, the next major Fibo level is at 0.7845: 38.2% of 0.9504/0.6826).
The short term momentum indicators are showing a degree of bearish divergence, so a failure at 0.7500 would now find support at the previous high at around 0.7485 and then again at the rising trend support at 0.7455 and at the Fibo support at 0.7425 (23.6% of 0.7108/0.7527). Back below here would look to 0.7400 and possibly lower to where the next support is at 0.7365 (38.2% of 0.7108/0.7527).
Economic data highlights will include:
Consumer Inflation Expectation, China CPI, PPI.
Jim LanglandsFX Charts
