AUD/USD: 0.8300
EUR/USD: 1.2315
Early dollar strength which saw new trend highs against all the majors, dissipated and then reversed, led by profit taking in US$Jpy which headed sharply lower in making the first decent correction in quite a while. In the absence of any major data today, it could be a session of general consolidation, although Asia gets the Australian Business Confidence/Conditions. Later on sees the German Current Account, Trade Balance and US Wholesale Inventories, and from the UK, the Industrial & Manufacturing Production and the NIESR GDP Estimate
The Aud, having opened the week on a soft note, on the back of the Government financial industry report and the soft Chinese trade data, pushed to a trend low of 0.8260 before bouncing back later in the day, to 0.8315, as the weakness in the US$ came to the fore. Todays focus will be on the NAB Business Confidence Survey, where a soft reading would see the pressure return to the downside.
Technically, minor support is seen at around 0.8285 ahead of the session low of 0.8260. A break of this would see acceleration lower, albeit possibly not today, but there is not a great deal of support to be seen until the May 2010 lows at 0.8066. Before then 0.8200 and 0.8100 would provide obvious psychological levels where buyers will congregate but they will not be bothered today.
As I have been harping on about for the last couple of months, I think we are eventually heading a fair bit lower than 0.8000 (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, above the session high of 0.8322, will see minor resistance at 0.8350, beyond which could head back to 0.8365 (100 HMA), 0.8385 (23.6% of 0.8795/0.8260) and then to 0.8400 although this looks doubtful in the short term.
If wrong, above, 0.8400 would see sellers ahead at last Thursday’s 0.8428 high, which ties in nicely with the descending trend resistance, currently at around and lies just ahead of the 200 HMA at 0.8445 and would also provide resistance although I cannot see them coming under pressure. Look to sell into the strength with a SL placed above 0.0.8480.
Overall look for another choppy session at close to 0.8300, with a mild bias to slightly higher levels, but with the medium term view of selling into strength for an eventual move below 0.8260. Unless tomorrow’s Nov employment report presents a big topside surprise, it seems likely that the bears will continue to fade the rallies as the chances of a 2015 RBA rate cut increase.
Economic data highlights will include:
NAB Business Confidence Survey.
Jim Langlands
FX Charts
www.fxchartsdaily.com
