AUD/USD: 0.8930EUR/USD: 1.3255The Aud traded nicely to the base of the weekly channel yesterday, bottoming out at the 0.8850 support (0.8848 low), since when we have had a minor recovery to currently sit at 0.8930.
Today's RBA decision will be the driver and with a 25 point cut fully written in, it would not surprise me to see a short market get squeezed for a bit of a run to the topside and back to 0.9000, where sellers should once again gather. There are plenty of sellers of the crosses as well, with Aud/Jpy and Gbp/Aud both under heavy pressure, from and Aud point of view.
The points to watch, on the downside are at 0.8900, and then at the session low of 0.8850. If that gives way, there will be plenty of stops which would drive the Aud towards 0.8770. I cannot see this unless the RBA surprises the market by cutting by 50 basis points. There has been some loose talk of this in the last day or so, but I don't see it happening, although analysts are forecasting that today's cut will be the first of two or three 25 point cuts over the next 12 months. If the RBA sit on their hands today (unlikely - although they have never cut before during an election campaign - so it should not be completely ignored), there is going to be a very nasty short squeeze. I don't see this happening either, but if it were to be the case, it would only provide a selling opportunity in advance of future cuts to come.
On the topside 0.8970/0.9000 will be difficult to break through, although the 4 hour charts do have some positive momentum to possibly drive it a little higher. Above 0.9000, 0.9015 is 38.2% of 0.9295/0.8848 while, above this, 0.9068 (50%) and 0.9118 (61.8%) are points to watch, but unlikely to be seen for a while.
In the longer term the down trend remains firmly intact, but we may get slightly better levels to sell into. Wait for the RBA to find out!
Economic data highlights will include:
ANZ Job Ads, Trade Balance, RBA I/R Decision
