AUD/USD: 0.9620EUR/USD: 1.3780AUDUSD
The Aud spiked up to 0.9755 after the stronger than expected CPI but that was as good as it got and once it was announced that China’s biggest banks tripled the amount of bad loans written off in the first half of the year and that rates might be on the rise to curb inflation - thus slowing demand -, it was all downhill for the Aud.
Really the Aud did pretty much as we thought it might do over the last few sessions, and having reached the long term objective above 0.9700, it has corrected nicely and looks as though it could have further to go on the downside in the next session or two. The 4 hour charts are pointing aggressively lower and having taken out 0.9625 (rising trend support / 23.6% of 0.9280/0.9730) in heading to a low of 0.9606 we could move on towards the next Fibo level at 0.9576 and possibly on towards 0.9550 and then to the rising trend support at 0.9525 .
The topside looks as though it will see some decent selling interest now, with 0.9625 likely to be minor nearby resistance. Above this would head on towards 0.9640 and possibly to 0.9670. The hourlies are in the process from recovering from yesterday's sharp selloff, so I would not discount a bit of a rally but would be surprised to see it back at 0.9700 - at least in the coming session or two.
Today, use 0.9580/0.9660 as a guide, and as I have said before, I think in the bigger picture we are in for a prolonged period of 0.9500/0.9800 trade, but we look likely to head to the lower end before we can once again think about the topside.
Also of note is that Aud/Jpy took a big hit, failing badly and falling from 95.65 to 93.42. Further falls towards the rising trend support at around 92.70 look very possible, but if seen is probably a medium term buying opportunity.
HSBC China Flash Mfg PMI (exp 50.2/previous 50.4) and the RBA's Lowe will provide the economic interest today.
Economic data highlights will include:
HSBC China Flash Mfg PMI, RBA Annual Report, RBA Dep Gov Lowe Speech
