AUD/USD: 0.8690EUR/USD: 1.2630The US$ found its legs again on Friday against the majors with the exception of the Yen, with the Euro again under pressure following some more dovish remarks from Mario Draghi. Oil took another battering before recovering, while equities were sold heavily, breaking important support, and look headed much lower. US/Japan holiday's today may limit the action, although the US stock markets will be open. The Aud$ may see some interest from the release of the China New Loans and Trade balance, followed later by a speech from the RBA Assistant Governor, Debelle.
The Aud had a tough session on Friday, hurt by the combination of China's coal tariffs, soft Australian investment housing finance and a general risk-off theme, not helped by another selloff in equities and finished close to its lows of 0.8680.
Today's main interest will lie in the China Trade balance which is expected to show a surplus of $41.10bn, previous $49.84bn (Exports; expected : +12.0%y/y . Previous +9.4%. Imports; expected : -2.0%y/y. Previous -2.4%)
Further losses look likely in the days ahead, although the hourly charts are oversold and a run below the recent 0.8641 low may have to wait until later in the week. The trend remains lower though, so a break of 0.8642 would then find bids at the July 2013 low of 0.8632, below which would suggest a test of 0.8600. Under 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, but which is unlikely to be seen in the first half of the week. As/when we do break below here, the way would then open up for a much deeper decline towards the May 2010 lows at 0.8066.
On the topside, 0.8700 will now see sellers ahead of minor resistance at 0.8730, the 200 HMA at 0.8760 (200 HMA) and the 100 HMA at 0.8785.
As I said before, I think rallies will be temporary and should be sold into, and that eventually the major dollar uptrend will continue, putting the Aud under further downside pressure, albeit at not quite the same pace that we have seen recently.
For today, use 0.8650/0.8715 as a guide.
Economic data highlights will include:
M: China New Loans, Trade balance, RBA Gov Debelle Speech
T: NAB Business Confidence/Conditions
W: WBC Consumer Confidence Survey, New Car Sales, China CPI, PPI
T: Consumer Inflation Expectation, China FDI.
Jim LanglandsFX Charts www.fxchartsdaily.com
