AUD/USD: 0.8970EUR/USD: 1.3860Risk aversion following on from the soft weekend Chinese data is still running through the markets, with the Aud in particular being under pressure. Elsewhere, the currency markets have been relatively steady, although the Yen also is in some demand as a safe haven destination. Equities look as though they are breaking some trend support and could come under further downside pressure. Today is relatively free of major data, although Australia will get the WBC Consumer Confidence & Home Loans and Japan will have the BOJ Monthly Economic Survey. Later we get the EU Industrial Production, but with little due from the US it could be another rangebound session, with one eye on progress (or otherwise) in the Crimea.
The Aud continues to suffer the fallout from the soft weekend China data, with heavy copper and iron ore prices, and having fallen through 0.9000 in NY, it has not looked back, in heading to a low of 0.8962. Copper's break below $3.00 increased market concerns that China's corporate credit issues would be worsening and placed further pressure on the Aud.
Things do not look positive for the Aud and both the 1 and 4 hour momentum points to a test of the rising trend support, close by, at 0.8957, which lies just above 0.8953 (50% of 0.8659/0.9133). A break of this would suggest a run towards 0.8925 (daily cloud top/Kijun) and then to 0.8895 (61.8%), with not too much to hold it up.
Today sees the WBC Consumer Confidence, Inflation Expectation and Home Loans, and if this comes out on the soft side we could yet see a test of 0.8900, although probably unlikely ahead of tomorrows Jobs data.
If we break the lower of the 2 rising trend supports (chart), currently at 0.8890, then we are likely in for a deeper acceleration and look likely to head towards the 61.8% support at 0.8840 and possibly lower, below 0.8800, to 0.8775 (76.4%). Not yet though.
A more positive outlook could turn the Aud higher once again although there will be sellers now at 0.9000, above which there will again be plenty of interest to sell in the 0.9020/0.9040 area. I don’t think we are heading close to here today, but if wrong, above 0.9040 would potentially see a squeeze towards the 100 DMA at 0.9075.
Further out, beyond 0.9075, then we might expect a run up towards 0.9100 and possibly to Friday’s top at 0.9133. Above this looks a little unlikely in the near term but the eventual target would be the 200 DMA at 0.9170, which in turn lies ahead of the 12 month descending trend resistance currently at 0.9195.
Economic data highlights will include:
WBC Consumer Confidence, Inflation Expectation, Home Loans
Jim LanglandsFX Charts www.fxcharts.com.au
