AUD/USD: 0.9160EUR/USD: 1.2920The dollar remains underpinned ahead of expectations of a more hawkish mood from the Fed at next week’s FOMC meeting, while the ECB, BOJ and now the SNB look to be heading in the opposite direction. The Aud, having been a major beneficiary of the carry trade, was a big loser today and looks as though it is headed to 0.9000 and lower. Direction for the Aud today will come from the Jobs data and the Chinese CPI. The RBNZ just left rates unchanged, which caused the Kiwi to dip briefly lower. Later in the day the highlights will be German/French CPI, with not much else due until tomorrow's US Retail Sales.
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The Aud saw little respite today and headed down to 0.9112, before a mild bounce, to hold on above 0.9150 and it will now await the outcome of today’s Jobs data, expected to show a mild improvement (6.3%, +12K). Also today, keep a close eye on the Chinese CPI (exp 0.4%mm, 2.2% yy) which if below par, will add further downside pressure.
As we said yesterday, with the focus beginning to turn towards next Wednesday’s FOMC meeting and the expectation that the Fed will ramp up the hawkish rhetoric, we could see a further move out of the Aud which has been a major beneficiary of low US rates and with yield spreads set to diminish, I suspect that in the not too distant future the Aud will be trading below 0.9000.
If today’s data fails to meet expectations, then we could head lower rather quickly but below today’s 0.9112 low would find strong support at 0.9100 (100 Month MA). A break of this would then head towards 0.9050 (Weekly Cloud Base, 50% pivot of 0.8660/0.9505, Monthly Tenkan) and eventually towards 0.9000. Further out the head/shoulder target is to be seen at around 0.8950.
If the data surprises to the upside, we could see a squeeze back towards the 100 DMA at 0.9185, and then to 0.9200. The steep descending trend resistance is at 0.9220, which should we see it, would appear to be a sell opportunity although a break would see a squeeze back towards the breakdown level in the 0.9240/60 region, where again I think the Aud would be a sell, looking for lower levels towards 0.9000 next week.
Economic data highlights will include:
Unemployment, China CPI, PPI
Jim LanglandsFX Charts www.fxchartsdaily.com
