AUD/USD: 0.9410EUR/USD: 1.3885Most of the action was in stocks today, although the dollar remained under pressure as expectations for a US rate hike were pushed back to H2 2015. Downside momentum may slow a bit given the oversold nature of the dollar on most of the short term charts, and there is not a lot of data to drive the markets. The highlights will be the German CPI and the Rts/Michigan Consumer Sentiment. Before then Asia gets the BOJ minutes and the Chinese CPI, which might put some pressure on the Aud and Kiwi, if below par.
The improved jobs number allowed the Aud to rise to 0.9439, a new 5 month high before the soft Chinese Trade data took some of the wind out of its sails. Later in the day the Aud took out the option barriers at 0.9450, in heading up to 0.9460, before reversing sharply back towards 0.9400, where it bottomed out late into the US session.
The positive jobs data should prove supportive of further medium term gains in the Aud given that is probably another nail in the coffin of those expecting a rate cut, and the chances of a hike in Q4 seem to be building momentum. Thus, dips appear to be a buying opportunity and we may get a chance today given that the intra-day indicators are pointing a bit lower. If 0.9400 is taken out then we should expect a run back towards 0.9385 and then possibly to 0.9350. Rising trend support is now at 0.9325, which needs to hold. If it were to give way, we should expect a deeper correction towards 0.9270.
While we remain bullish for the medium term and look to buy dips, the topside today looks a bit limited and I am doubtful of heading back above 0.9460. If wrong, there is not too much to stop it heading towards 0.9494 (76.4% of 0.9757/0.8660) although I suspect it is too early for this. Above here, 0.9542 is the 6 Nov high, and the longer term strategy of looking for a run towards the SHS target at 0.9580 remains intact.
For today, look for 0.9385/0.9440 to cover it, with direction to be dominated by the China CPI. A soft reading (exp -0.5% mm +2.5% yy ) might put some pressure on the downside.
Economic data highlights will include:
China CPI, PPI, Leading Economic Index
Jim LanglandsFX Charts www.fxcharts.com.au
