AUD/USD: 0.8815EUR/USD: 1.2670The dollar is weaker again today, with the Euro holding its ground despite some dire German industrial data and an IMF report, warning of a downturn in the global growth outlook and the chance of the EU heading towards a deflationary cycle. The Yen has had its best gains against the dollar in 8 months and US stocks are getting slaughtered into the close. Today's focus will be on the FOMC Minutes later in the day, but ahead of that Asia will look to the HSBC China Services PMI for some guidance
The steady squeeze higher in the Aud has continued pretty much since the release of the RBA Minutes, reaching 0.8835 in NY, before settling back at 0.8815 after the rally stalled when the IMF lowered global economic growth forecasts put a dent into risk sentiment.
Today's interest will be on the HSBC China Services PMI, although the focus is more likely to be on tomorrow's Unemployment report, and should both of these sets of data come in below par, this rally is likely to fizzle out for a return to lower levels.
Above today’s session high would suggest a move to the first Fibo resistance at 0.8842 (23.6% of 0.9504/0.8642), beyond which there is not a great deal to stop the Aud heading back to 0.889/00, but which if seen would be another sell opportunity I think.
On the downside, back below 0.8800 would see a return to the 100/200 HMA at 0.8750 and then to 0.8700. Below here, there is minor support at 0.8685 ahead of the 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 still hint at slightly higher levels, I think they are a sell opportunity for an eventual return to 0.8650 and lower, but it will be a choppy session today, with the construction PMI due ahead of the RBA.
Economic data highlights will include:
HSBC China Services PMI.
Jim LanglandsFX Charts www.fxchartsdaily.com
