AUD/USD: 0.8710EUR/USD: 1.2450The US$ has staged a recovery today after some early Asian selling, and most of the majors sit near their session lows. We seem to be in a period of general consolidation, which looks as though it could continue for the next few sessions although further doveish comments from various ECB members such as we saw today, will have the Euro under pressure once again. Today's direction will be guided by the ZEW Economic Survey and then later by the US PPI, while the UK will get the CPI, PPI,RPI. The Aud$ may see some decent action, where the RBA Minutes are due and Glen Stevens will also be speaking.
After reaching a high of 0.8795 in Asia, the Aud has slipped steadily lower and is currently back below the 100 HMA (0.8715).
The RBA minutes and Governor Stevens’ speech will be the main points of focus today. The minutes are likely to reiterate the mantra of steady-as-she-goes on rates and will probably, once again, lament the level of the currency. Stevens may have more effect when he speaks, particularly following last week’s comments by the RBA’s Asst. Gov. Kent who noted that intervention hasn’t been ruled out. If Stevens repeats that view, then the Aud could well head sharply lower.
In the meantime, we are back at close to 0.8700. The 1 and 4 hour charts look rather negative and a break of the 0.8695 session low would see the Aud head back towards Friday’s spike low at 0.8648. There should be some decent buyers down there, although a break would head towards 0.8600 and to the recent low at 0.8590, 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.
On the topside, we may see a run back towards 0.8750, although right now this appears unlikely. If wrong then look for a return towards the session high of 0.8795. Above 0.8800 could then head on towards 0.8865 (38.2%0.9398/0.8540) although if we do see it up there, we should be looking for levels to sell it as I suspect that the larger downtrend will eventually resume albeit it looks as though it could take a while.
Look for more choppy consolidation today, but with a mild downside bias. Use 0.8730/0.8670 as a guide.
Economic data highlights will include:
RBA Minutes, RBA Stevens Speech, CB Leading Indicator.
Jim LanglandsFX Charts www.fxchartsdaily.com
