AUD/USD: 0.8770EUR/USD: 1.2750Despite the US holiday it has been a wild ride into the NY close where stocks have collapsed again causing a late session selloff in the US$, which has taken out the session highs/lows against the Euro, Yen and Chf, with stops getting triggered in very thin conditions. It looks like being volatile when Japan/US return from their holidays, so tread carefully. Today’s action comes via the German/EU ZEW Survey and EU & UK CPI’s, while Asia gets the China New Loans, and from Australia, the NAB Business Confidence/Conditions.
After an early Asian selloff in the Aud, it has bounced well from the 0.8651 low, helped by the solid Chinese trade data yesterday, and currently sits near its highs of 0.8786, where it has so far been capped by the 100 HMA.
The indicators now look positive on both the short term and the daily indicators, although with the equity markets looking heavy again I am not sure how much upside is likely if risk assets continue to feel the heat.
The RBA’s Debelle is due to speak shortly, who could well talk the Aud lower again, after which we have the NAB Business Confidence/Conditions and China New Loans to drive direction today.
Technically, I think we are in for more choppy trade within the range of the last few days. Thus, a break of today’s session high could see the Aud head on toward 0.8800 and maybe to 0.8820 beyond which could squeeze to last week’s top at 0.8898. I cannot see it beyond here though and there will be plenty of keen sellers ahead of that looking to get set for what could be the next leg lower.
On the downside, 0.8750 will see bids, below which I suspect there will be further buyers all the way down to 0.8700. Under here could see an acceleration back towards the session lows at 0.8651 although the short term indicators suggest this to be unlikely today. If wrong, the trend low at 0.8641 would come under pressure ahead of 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.
For today look for a session of 0.8720/0.8820 to provide a guide.
Economic data highlights will include:
RBA Debelle Speech, NAB Business Confidence/Conditions, China New Loans.
Jim LanglandsFX Charts www.fxchartsdaily.com
