AUD/USD: 1.0278The Aud did try to head higher on Friday, on the back of the firmer equity markets and Gold, which finally regained 1400oz. Exporter buying also helped it along but it, but the Aud was unable to hold on to the gains, and it turned lower again late in the session as risk sentiment soured to close just about on the week's lows.
There is a fair bit of data out this week, although with ANZAC day on Thursday, liquidity become a bit thin. China will get the ball rolling with the flash HSBC manufacturing PMI on Monday (previous 51.6, exp 51.4) and this will be followed on Wednesday by the Australian CPI and the Chinese Business sentiment on Friday. Any suspicion that Chinese growth is continuing to slow will ensure the pressure remains on the Aud.
The technical outlook for the Aud is not particularly special, although if US$/Yen goes through 100, there is likely to be some follow on support for it, through demand in the cross, which would at least slow the downside. It is of course possible that if the CPI reading is above expectations, the idea of an RBA rate cut would be more or less forgotten altogether, and could see a reversal to higher ground as the hawks start to talk of the possibility of the next rate move being a rise back to 3.25%. For the time being, it doesn't look as though rates are going anywhere in a hurry but the CPI will be a highlight for the weeks trade.
On the other side of the coin if, as I suspect, the equities markets are in for a tough time in the coming week, we could see a move to substantial risk aversion which would ensure that the downside for the Aud accelerates. If this turns out to be the case, the Yen would also be a likely beneficiary and selling of Aud/Jpy would add to the downside pressure.
The Aud closed the week well below the 100WMA (1.0367), the first time it has done so in 6 weeks, and this now looks like pretty strong resistance. With Fibo resistance at 1.0386 (38.2% of 1.0581/1.0267) sitting in front of the 200 DMA at 1.0395 and the 100DMA at 1.0409, it is difficult to see the Aud regaining too much ground in the near future and any squeeze back to 1.0375/1.0400 looks like ideal selling ground.
I am not sure that we will get that lucky, and having closed pretty much on its lows, further losses towards 1.0225 (76.4% of 1.0115/1.0581) and then to the rising trend support at 1.0210 looks to be on the cards. Below there sees a run towards 1.0150, and then to the March low at 1.0115 would be the target and I am still living in the hope that we are in the "E leg" of the major triangle, where the target is at 0.9700/0.9800.
EURAUD: 1.2700. The cross has had a decent run and although the longer term charts look mildly positive, the daily RSI's are at overbought extremes and the 200 WMA is right ahead at 1.2775. The weeklies are not giving any real hint either way and for the time being it looks to me as though we are in for some choppy sessions below the resistance but buying dips to around 1.2620 appears to be the plan. Below here may take us to 1.2540, but this seems a bit doubtful. If we do get above the 200WMA, then we may see some acceleration to 1.2816 (61.8% of 1.3190/1.2223), but I think we may have to wait for that.
GBPAUD: 1.4800. The cross looks to be a little more positive than Eur/Aud although if we do get some upside progress it looks like it will be choppy and slow. There is strong resistance 1.4867 (38.2% of 1.5675/1.4380) but if we can get through it then we should head towards 1.5000 (100 DMA). Dips should now be contained at 1.4700, although a break would head back towards 1.4630.
I am not sure how this would come about though. Given the negative outlook for Sterling, the Aud would have to collapse for the cross to move higher. I don't think this is going to be the case so it probably means that the cross may work its way very slowly higher, but that it is going to be a choppy affair that will take time to play itself out. Stay nimble!
Economic data highlights will include:
M:
T: CB Leading Indicator, HSBC flash Mfg China PMI
W: CPI,
T: ANZAC Day
F: China MNI Business Sentiment Indicator
