AUD/USD: 0.8380EUR/USD: 1.2480Both the ECB and BOE left rates unchanged, as expected. However the lack of any immediate action from the ECB saw a sharp rally in the Euro, but which has since given back some of those gains. Elsewhere, US$Jpy took out the 120 level before a quick turnaround, and is currently unchanged from this time yesterday. The market will now look to the Q3 EU GDP for some guidance, but the real action will come from the US Jobs data. Australia sees the AIG Performance of Construction Index, while from the UK we get the Consumer Inflation Expectations. Good w/e.
The Aud sank to a low of 0.8355 before bouncing to 0.8420, although it has since given up those gains to sit back at 0.8380 late in the US session.
The action today is likely to be rather muted as the market awaits the US jobs figures but we do get the Nov AIG Performance of Construction Index and a weak result may keep the pressure on the downside for the Aud, with the market now increasingly eyeing the chance of a 2015 RBA rate cut on the back of the weakening economic performance.
Technically, 0.8355 is the first support ahead of the important 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.
On the topside, 0.8400 (minor) will see sellers ahead of today’s 0.8428 high. Above that we could see a squeeze higher towards 0.8445 (100 HMA) and 0.8457 (23.6% of 0.8795/0.8355). The descending trend resistance, currently at around 0.8475 and the 200 HMA at 0.8500 will also provide resistance although I cannot see them coming under pressure. If wrong, look to sell into the strength with a SL placed above 0.8540, where the base of the monthly cloud lies.
Economic data highlights will include:
AIG Performance of Construction Index.
Jim LanglandsFX Charts www.fxchartsdaily.com
