AUD/USD: 0.8400
EUR/USD: 1.2320
The US$ had continued to make gains on most fronts assisted by soft EZ PMI's and firmer US bond yields, as the market now turns its focus to the ECB and BOE meetings due later today. No change is expected from the BOE or the ECB although the ECB could yet spring a surprise and send the Euro lower still. Elsewhere today, Australia gets the Retail Sales and Trade Balance, and if those are soft, then the Aud is going to be under further downside pressure.
The Aud has chopped around either side of 0.8400 since the weak GDP reading yesterday and now awaits the outcome of today’s retail sales data ( which are expected to be flat, following on from last month’s rise of 1.2%) and trade balance (exp -1.9Bio).
The theme of trading from the short side remains intact and below the session low of 0.8387 would see a run down towards the June 2010 low at 0.8315, a break of which would potentially see a steeper acceleration towards the May 2010 lows at 0.8066. As I said before, I think we are eventually 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.
If the data is better than expected and we see a squeeze higher, then 0.8445 and 0.8465 will provide minor resistance ahead of the first meaningful Fibo level at 0.8481 (23.6% of 0.8795/0.8387) and the descending trend resistance, currently at around 0.8500.
I don’t think we are heading above here today and would use any rally towards 0.8500 as an opportunity to sell into.
Economic data highlights will include:
Trade Balance, Retail Sales.
Jim Langlands
FX Charts
www.fxchartsdaily.com
