AUD/USD: 0.8465EUR/USD: 1.2465Oil was again in focus, collapsing again following Thursday's OPEC meeting. Gold & Silver followed, and Gold will be active again today following the Swiss weekend referendum which was defeated 77/23%. This week could be rather hectic, with plenty of data coming from all directions but with the focus likely to be on the ECB, BOE & RBA I/R Decisions, the global PMI’s and the US Jobs/NFP. Starting today, we get the global manufacturing data, where China will lead things off in Asia. NZ Terms of Trade coming up, and RBNZ Governor Wheeler will be speaking shortly.
AUDUSD is opening interbank trade at around 0.8465, creating a Monday gap lower on the back of the selloff in commodity prices, and not helped by the outcome of the Swiss referendum (the "No" vote won 77/33%), which is likely to put the pressure on the downside for the Gold price. The base of the major channel is now under severe pressure, a break of which could herald steeper losses.
The sell-off in oil rolled over into the other commodities and in turn to the commodity bloc currencies, keeping the pressure on the Aud which retested the recent low, but bounced from 0.8485 to close at 0.8500.
There is plenty of data out this week, with the focus to be on tomorrows RBA meeting at which no change to rates is expected and the market will again look to the statement for guidance, where another "steady as she goes" statement is likely at the final meeting until February. Given the selloff in commodities, the RBA may yet get its wish for a lower Aud but possibly with some unpleasant consequences as a lack of demand, particularly for Iron Ore from China, would be of concern. Q3 GDP (exp 0.7%qq, 3.1%yy) will be released on Wednesday, Retail Sales, Thursday (exp +0.1% mm Oct).
Technically there is not too much change as long as 0.8480 holds, although this could come under pressure if today’s Chinese official Mfg PMI underperforms, especially if it comes in under 50.0 (Official PMI; exp 50.6). The HSBC number will be released shortly after the official figure.
Friday’s close on the monthly Ichimoku chart, below the base of the cloud (0.8535) - the first close under here since March 2009 -potentially has very bearish implications (see chart below) which could eventually take the Aud quite a lot lower. If 0.8480 does give way, look for decent bids to hold the Aud, in the short term, at the base of the major channel at the 0.8450 area (monthly chart below). A break of this would see a steeper decline towards the June 2010 low at 0.8315 and then to the May 2010 lows at 0.8066. Eventually I think we are heading a fair bit lower than that (see long term outlook from update of Nov 24) and still look for 0.6000, albeit a couple of years down the track. A monthly close back above the neckline, now at 0.8800 would invalidate that view, but this is beginning to look increasingly distant. We shall see.
On the topside, The cloud base at 0.8535 and then Friday’s high (and the 100 HMA) at 0.8547 will provide the initial resistances, above which would head towards the minor descending trend resistance, currently at 0.8570. Beyond there would see a run back towards 0.8600 (200 HMA), although right now it doesn't look like getting anywhere close.
Selling rallies towards 0.8540 and again at 0.8570 seems to be the plan today, with a SL placed above 0.8600.
A word of caution in the AudUsd. If the DXY were to turn lower (see report), the Aud would benefit, at least against the dollar, and in that event a better trade for those wanting to be short Aud may be against the Euro (report at the end of this article).
Economic data highlights will include:
M: AIG Performance of Mfg Index, China Official Mfg PMI, HSBC China Mfg PMI, RBA Commodity Index
T: TD Inflation Expectation, Building Permits, Current Account, RBA Meeting/Statement
W: AIG Performance of Services Index, Q3 GDP, China Official/HSBC Non Mfg PMI
T: Trade Balance, Retail Sales
F: AIG Performance of Construction Index.
Jim LanglandsFX Charts www.fxchartsdaily.com
