The Euro headed lower against the dollar today, taking most of the other majors with it following a Reuters report that suggested the ECB is ready to begin buying corporate bonds as soon as December. Stock soared on the news as risk sentiment improved, although the Yen failed to notice and still sees decent demand against the dollar and the crosses. Today's direction will be driven by inflation data, first from Australia and then later in the day from the US. Also of note, Japanese trade data is coming up, while the European highlight will be the BOE MPC Vote and BOE Minutes.
The Aud hit a high of 0.8832 after the solid Chinese GDP came in at 7.3% for Q3, slightly softer than the previous reading but still above the general expectation of 7.2%, and backed up by solid industrial production data.
That was as good as it got for the Aud though, and it has since been forced back below 0.8800, under pressure from the stronger US$, and currently sits at 0.8780. This comes ahead of today’s Q3 Inflation data (exp 0.4% qq, 2.3%yy, previous 3%yy) which is expected to come in a fair bit softer than the previous reading due to the repeal of the Carbon Tax.
A particularly weak reading could have the Aud on the back foot once again and looking for a run towards the support at around 0.8750/60, below which would head towards Friday’s lows around 0.8730 and then to 0.8700. I doubt that we are heading below here today unless the CPI is overly weak, but if wrong, would hint at a run towards last week’s lows at 0.8685, 0.8675 and below there at 0.8651.
Although the short term indicators are mildly negative, the dailies still point higher, so we may well be in for a continuation of the current choppy trade over the next couple of days, within the 0.8700/0.8830 range. In the short term 0.8800 will again see sellers ahead of the 0.8832 session high. I don’t think we are heading up above 0.8800 today, but if wrong, a stronger topside break would take the Aud to 0.8841 (23.6% of 0.9504/0.8641), beyond which would see a run to 0.8860 (15 Oct high) and possibly to 0.8894 (9 Oct high).
Economic data highlights will include:
WBC Leading Index, CB Leading Indicator, CPI.
Jim LanglandsFX Charts www.fxchartsdaily.com
