AUD/USD: 0.8720EUR/USD: 1.2435It was a mixed day today, with Sterling the main loser after the dovish BOE QIR report indicated a delayed time horizon for any interest rate hike, while the main winners were the Aud and Kiwi. The Euro and Yen both traded in choppy fashion and finished generally under some pressure against the dollar, and the Euro in particular may feel the heat again later on, once the EU CPI figures are released. Asia’s focus will be on China, where Retail Sales, Industrial Production are due. NZ Business PMI coming up shortly
The Aud has had another choppy session but is finishing on a firm note having reached a peak of 0.8744 (23.6% of 0.9401/0.8540) before easing off a little into the NY close.
Some important data out of China today will provide the immediate focus, while locally, Australia will get the Consumer Inflation expectation. The Chinese Retail Sales (exp 11.6% yy) and the Industrial Production (exp 8%yy) will be the main drivers, and if solid, could see the Aud build on its current gains, with the 4 hour indicators looking positive, hinting at the chance of further short term gains.
Above 0.8744 would see a test of 0.8760 (5 Nov high)/ 0.8765 (23.6% of 0.9498/0.8540) and then heading on to the descending trend resistance at 0.8780. A break of this would be important and could lead quickly to 0.8800 and possibly to as high as 0.8865 (38.2%0.9398/0.8540)
Back below 0.8700 would see a return to 0.8685 and possibly to 0.the session low at 0.8665 (200 HMA). I don’t think we see it down here today, but if wrong, look for a run to the 100 HMA at 0.8640.
Further out, nothing has changed, and I think that we should be using the strength as a longer term sell opportunity (albeit probably at higher levels closer to 0.8800) as eventually I suspect that we will head back below 0.8600, below which would see a run towards 0.8570 and then possibly to last week’s low at 0.8540. As we said before, this will provide very strong support, being both 50% of the move from 0.6006/1.1082 and also the base of the monthly cloud. A break of this level though, and a November close below it, would have very bearish implications, for a test of the major channel base at around 0.8474 and then the May 2010 lows at 0.8066.
Watch out for RBA Governor Kent speech later on.
Economic data highlights will include:
Consumer Inflation Expectation, RBA Kent Speech, China Retail Sales, Industrial Production, Urban Investment, New Loans
Jim LanglandsFX Charts www.fxchartsdaily.com
