AUD/USD: 0.9225EUR/USD: 1.3800Another mixed day for the currency markets, with the dollar slightly stronger against the Eur0 and Chf, while weaker against Cable & Yen. The big winners were the Aud, and also the Kiwi, which followed in its wake. More choppy action could lie ahead, with the US GDP being the days main focus. UK gets the Retail Sales. NZ Trade Balance coming up shortly.
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The Aud made good gains today, after the expectations that RBA Governor Glen Johnson would talk down the currency in his speech in HK, failed to materialize. Instead he came out with a rather upbeat outlook which allowed for a quick 25 point jump, taking that Aud to 0.9200, from where it continued to move up to a session high of 0.9245, before settling the end of the NY session at 0.9225.
Also helping the Aud today was a Terry McCrann article in the Telegraph, suggesting that the RBA's repeated attempts to jawbone may be at an end, given the limited success of the strategy.
With the neckline of the Head/Shoulder formation well and truly broken, the way now appears open for further strength, possibly towards the measured objective which is at around 0.9590. There is plenty of wood to chop before then though, and above the session high at 0.9245, minor resistance appears at 0.9270. Beyond there though there is not a lot ahead of 0.9300, and then again not too much ahead of the Fibo levels of the fall from 0.9757/0.8660 which are at 0.9339 (61.8%) and 0.9494 (76.4%). At this stage are a long way off and with the short term indicators looking stretched, further upside progress today may be a bit limited.
On the downside, 0.9200 will now see bids, ahead of the neckline/200 DMA at 0.9150. If we trade back below here, be very careful of being long of Aud as the correction could be quite severe. There are a lot of traders watching this move and the market is very weighted to one side, both against the US$ and also on the crosses..
For today, use 0.9180/0.9250 as a guide. The short term indicators are very overbought and may need a session or two to unwind before we can make any further meaningful headway higher – if that is out it turns out.
Today look for 0.9200/50 to cover it, with a minor chance of 0.9270, but doubtful. Buying dips with a tight stop/reverse below 0.9150.
Economic data highlights will include:
New Home Sales
Jim LanglandsFX Charts www.fxcharts.com.au
