AUD/USD: EUR/USD: It was a wild ride in the commodities today with Gold and Oil both bouncing strongly from their new trend lows. Currencies were less dramatic, although Cable, Yen and Aud all made new trend lows against the dollar before bouncing. Today’s action will come via the RBA Meeting which will be the highlight in Asia and this will be followed later by the EU PPI, Spanish Unemployment, UK Construction PMI and then from the US, Construction Spending.
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The Aud has bounced nicely from its lows to reach a high of 0.8531, where it ran into trouble at the base of the monthly cloud, and has since settled back close to 0.8500 where it should sit ahead of today’s RBA meeting.
As with previous meetings, rates are expected to stay unchanged but the statement might pressure AUD lower in accordance with the wishes of the RBA. If the statement mentions any chance of lowering rates, as the RBA's Lowe recently noted, or intervention, as another assistant governor, Kent, has noted, then the Aud will once again look to test the downside.
0.8480 is now minor support, ahead of 0.8450 and the new trend low at 0.8416. Below there would see bids at 0.8400, below which would see a run towards the June 2010 low at 0.8315 and then to the May 2010 lows at 0.8066. As we said before, 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, although this is beginning to look increasingly distant. We shall see.
On the topside, 0.8530/40 will be a tough hurdle to break above, but if successfully overcome, then look for a run back towards 0.8560. I don’t think we are heading above here in a hurry now, but we could see a return to last week’s squeeze up to 0.8615
Look to sell rallies and use 0.8540/0.8440 as a guide today.
Economic data highlights will include:
TD Inflation Expectation, Building Permits, Current Account, RBA Meeting/Statement
Jim LanglandsFX Charts www.fxchartsdaily.com
