AUD/USD: 0.8765EUR/USD: 1.2650Short covering of long US$ positions was the main theme today with most of the gains seen after Friday’s NFP now having been given up. More short term losses look possible, although ahead of Wednesday’s FOMC minutes we could be in for a choppy but rather directionless session. The immediate focus is going to be on today’s RBA & BOJ meetings, where no change is expected from either, but the wording of the statements will be important. Later on, the UK Industrial/ Manufacturing Production and the German IP & US Consumer credit data will provide the interest.
The Aud traded a down to an Asian low at 0.8652, but then began to recover and without really looking back has soared above the 200 HMA at 0.8758, spiking to a high of 0.8783 ahead of today’s RBA meeting, where no change is expected.
The wording of the RBA statement will be keenly watched though, as the Aud is about 5% lower since the last meeting, which may incur a slightly less dovish tone from the RBA despite the recent lacklustre data, although they may well repeat the Aud is still too high which could send it lower once again. Once the RBA is done, the focus will turn towards the Jobs data, Thursday.
Technically, the Aud is back at the 200 HMA but could head on back to the session high and with the short term indicators pointing higher we could possibly head on towards 0.8800 and back to last week’s squeeze up to 0.8826. Beyond there would suggest a move to the first Fibo resistance at 0.8842 (23.6% of 0.9504/0.8642), which if seen would be another sell opportunity I think.
On the downside, 0.8735 (100 HMA will be the first support ahead of 0.8700. Below here, there is minor support at 0.8785 ahead of yesterdays 0.8652 low. A break of 0.8642 and the July 2013 low of 0.8632 would suggest a test of 0.8600, below which 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 short term indicators hint at slightly higher levels, I think they are a sell opportunity for a return to 0.8650 and eventually lower, but it will be a choppy session today, with the construction PMI due ahead of the RBA.
Economic data highlights will include:
RBA IR Decision, Statement, Construction PMI.
Jim LanglandsFX Charts www.fxchartsdaily.com
