AUD/USD: 0.8755EUR/USD: 1.2760It was a choppy session Friday although the US$ managed some mild gains after some solid US Consumer Confidence data. More choppy but rather directionless trade may be in store today in the absence of any major data (German PPI, Existing US Home Sales), but it will warm up as the week wears on, starting tomorrow with the release of the China GDP/Retail Sales/ Industrial Production. US equities rebounded well, generally underpinning improved risk sentiment. Australian data: RBA Minutes Tuesday, CPI, Wednesday.
The Aud had a choppy session on Friday but for the most part stuck fairly close to either side of the 100/200 HMA’s (0.8757/67). The Aud was underpinned by market chatter of a possible easing in China in coming weeks and spiked up to a brief high of 0.8811 on the news that the PBOC will inject 200 bio Yuan of 3 month loans to certain banks. That rally did not last long and saw a quick return to trade the rest of the session close to 0.8750.
More choppy trade looks likely this week and it could be quite volatile, although Monday may be quiet. Tuesday is likely to be a busier session after the release of the RBA minutes and the China Q3 GDP/Industrial Production/Retail Sales and Urban Investment numbers. Wednesday sees the Australian CPI and then on Thursday we get the Oct HSBC Flash Mfg-PMI, so there will plenty going on.
Technically the charts are telling us very little and thus a neutral stance is required in the short term with the price action likely to be dominated by spikes following the release of the various bits of data. The dailies are still supportive of further gains though, as they are still unwinding their previous oversold condition. Although I don't think we see it much above 0.8785 today (the daily Tenkan, at 0.8775 seems to be acting as a pivot), a break of 0.8800/20 resistance would allow for another move up towards 0.8860 and possibly to the daily Kijun at 0.8875 and then the 9 Oct high at 0.8898, which if seen would be a decent sell opportunity I suspect for an eventual resumption of the downtrend.
The downside will see buyers at Friday's lows around 0.8730 and then again at 0.8700. I doubt that we are heading below here early in the week, but if wrong, would hint at a run towards last week’s lows at 0.8685, 0.8675 and below there at 0.8651.
For today expect a reasonably tight 0.8730/0.8785 range.
Economic data highlights will include:
T: WBC Leading Index, RBA Minutes, China GDP, Industrial Production, Retail Sales, Urban Investment
W: CPI
T: NAB Business Confidence/Conditions, HSBC China Flash Mfg-PMI
F: China House Price Index.
Jim LanglandsFX Charts www.fxchartsdaily.com
