AUD/USD: 0.8610EUR/USD: 1.2640The FOMC minutes underlined the Feds concerns over low inflation and global growth prospects and the dollar has since seen some volatility against the majors, but is ending the US session pretty much where it was before the announcement, with more choppy consolidation looking likely. Yen weakness is still the major theme, which appears unlikely to change. Today sees the flash global manufacturing PMI’s, (where Asia will closely watch the HSBC China figure), and then later, the US CPI. The UK gets October Retail Sales.
The Aud had a tough day, drifting steadily lower on the back of the 5 year low on Iron Ore prices, and it has just seen a session low of 0.8600 following the FOMC Minutes. Iron Ore is weaker again today and will do little to help the Aud. A weak reading from today’s HSBC China Flash Mfg PMI number (exp 50.3) will see further downside pressure.
The recent low at 0.8590 will provide some decent support, but stops are noted below here, which if triggered 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.
While the shorter term indicators point lower I suspect that the upside today may be somewhat limited, where short term resistance would be seen at 0.8650 and then again at 0.8685 (100 HMA). Beyond there would head back to 0.8700 (200 HMA) but which looks unlikely today.
The downside remains the favoured trade, but the dailies have yet to really suggest that there is any real momentum behind it, so if we see 0.0.8540 it may be worth lightening up on some short positions, looking to re-sell any decent rally.
Economic data highlights will include:
HSBC China Flash Mfg PMI.
Jim LanglandsFX Charts www.fxchartsdaily.com
