AUD/USD: 0.8740EUR/USD: 1.2620The real action was in the equities markets today, which fell heavily and appear to have more downside to come. Currencies were choppy, after soft manufacturing data from both the EU and the US, but are generally unchanged, with the exception of the Yen which has strengthened following a slide in US yields. Today's focus will be on the ECB, although ahead of that, Australia will look to the TD Inflation data, HIA New Home Sales, Building Permits & Trade Balance for guidance. The UK gets the Construction PMI and then the US will get the Jobless Claims, Factory Orders
Having more or less reached the long term 0.8660 target (24 January low) after the soft retail sales yesterday, the Aud has bounced from 0.8662 to currently sit just below the 100 HMA at 0.8740, which will act as the initial resistance.
There is a fair bit of local data out today, with the Building Approvals being the main focus, and if the Aud can find the legs it could carry on to the broken SHS neckline at 0.8775, above which could see a further squeeze to 0.8800 although I don’t really see it today while traders wait for the ECB and more importantly the NFP tomorrow.
If the Aud data is soft again, which seems very possible, then back below 0.8700 would see another attempt on 0.8660, which should again act as strong support but below which would then head to the July 2013 at 0.8632. Below here there is little to suggest that the Aud will pull up ahead of the 50% pivot of the long term rally from 0.6006/1.1082, at 0.8538.
While the longer term trend does remain lower, I think the momentum will slow a little from here but any decent rally should be used as another sell opportunity.
Wait for the data and go with the flow.
For the Building approvals: m/m expected is +1.0%, prior was +2.5%. y/y expected is +12.7%, prior was +9.4%
Economic data highlights will include:
Aust TD Inflation, HIA New Home sales, Building Permits, Trade Balance, RBA Annual Report, China National Day:
Jim LanglandsFX Charts www.fxchartsdaily.com
