AUD/USD: 0.8725EUR/USD: 1.2540While equities are higher, with both the S+P and the Dow once again setting new all time highs, it has been a choppy but rather listless session for most currency pairs, and looks likely to be much the same again today ahead of the FOMC Minutes due later in the session. Ahead of that, the Yen will be the main focus in Asia with the BOJ Meeting due to conclude today, and then from the UK, we get the release of the BOE Minutes
The Aud is pretty much unchanged today, after trading a range of 0.8682/0.8746, with the downside being the result of a quick spike after RBA governor Stevens suggested that investors underestimate the risks of a decline in the Aud. It has since recovered although, I suspect that further upside may be a bit limited, with the action today being provided by the WBC Leading Index and then through the Yen cross following the BOJ meeting. After that it will be a waiting game ahead of the FOMC result.
The market will be looking increasingly at the price of iron ore, which is once again setting new trend lows at around $72, down around 4% so far this week, and with some analysts suggesting that it is going lower still, perhaps towards $60 in the months to come. That being the case, the Aud will feel the heat in the months ahead and the RBA will get the desired result!
As for today the points to watch, on the topside, are at the session high of 0.8746, which may be tough to break, although above 0.8750 look for a return towards Monday’s 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 that it looks as though it could take a while.
The downside will find bids at 0.8700 and then at today’s 0.8682 low, below which would see the Aud head back to Friday’s spike low at 0.8648 but probably not today. 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 the 7 Nov 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.
Economic data highlights will include:
WBC Leading Index
Jim LanglandsFX Charts www.fxchartsdaily.com
