AUD/USD: 0.8615EUR/USD: 1.2440A firmer German IFO business reading underpinned the Euro today and it would appear there may be some room for further short term gains as positions are squared ahead of the US Thanksgiving holiday. Direction today will be decided by the outcome of the GDP data due from Germany and the US, and then by the US Consumer Confidence and Expenditure figures. Asia gets the BOJ Minutes and there will be speeches today from the BOJ's Kuroda, from the RBA's Lowe and from the BOE Governor Carney, speaking to the Treasury Committee on the inflation outlook.
The Aud has been unable to maintain the enthusiasm seen after Friday’s China rate cut and is now back sitting above the important support in the 0.8590/0.8600 area. There has been little bounce from the lows in late NY trade and although there is no data out today, the outlook does appear to be rather bearish for the Aud.
Watch out for RBA Deputy Governor Lowe who will be speaking today at the Australian economic forum, and may well once again take aim at the Aud. I noticed yesterday that ANZ lowered their targets for the Aud to 0.8200 for end-2015 and to 0.8000 for 2016, based on an outlook for little improvement in commodity prices, a cyclical slowing of growth in China, and shrinking purchasing power parity models over the next couple of years.
A break of 0.8590 would see an acceleration towards last week’s low at 0.8565, a break of which would head to the major support seen at the 7 Nov low at 0.8540, this being both the 50% pivot of the move from 0.6006/1.1082 and also the base of the monthly cloud. A break of this level, 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 need to regain the 100 HMA at 0.8645 and more importantly the 200 HMA, now at 0.8685 in order to make further gains towards 0.8700. The short term indicators look negative and I think selling rallies for another look at 0.8540 is probably the way to go.
Economic data highlights will include:
RBA Lowe Speech, China CB Leading Economic Index.
Jim LanglandsFX Charts www.fxchartsdaily.com
