AUD/USD: 0.8295
EUR/USD: 1.2370
General US$ weakness allowed the other majors to make a decent recovery today from their recent trend lows, before the dollar staged a partial recovery of its own late in the session. In the absence of any major EU or US data today, it could end up being choppy but rather without direction, so the focus will be on Asia, from where we get the China CPI for November and from Australia where the Consumer Confidence and Home Loans data are due. Gold and Silver surged on safe haven interests. Oil makes new lows on growth outlook concerns.
The NAB Business Confidence outlook, accompanied by their realigned view of two rate cuts to come in the next 12 months was the main feature of the first half of the session and combined to send the Aud down to a new multi year low of 0.8224. The move was overdone by the time that Europe got going and we have since seen a strong bounce to as high as 0.8370, assisted by lower US bond yields and a generally lower US$, which in turn has seen a reverse, with the Aud now back at close to 0.8300.
Focus today will be on the WBC Consumer Confidence and China CPI (Nov - exp 1.6%yy, 0.0%mm) and a soft result will see the Aud come under pressure again, for another look at the trend lows, ahead of tomorrow’s Australian Unemployment report.
Technically it looks to me as though we are going to be in for a choppy ride over the next session or two, but possibly with a mild upside bias if the 4 hour momentum indicators are t be believed. That being the case, 0.8335 (100 HMA) will act as minor resistance ahead of 0.8350 and the session high of 0.8370. Beyond there could then head on to the descending trend resistance at 0.8390 and the 200 HMA at 0.8405, which if seen should be a reasonable sell. If wrong, a move above 0.8400 would see a run to last Thursday’s 0.8428 high and then to 0.8440 (38.2% of 0.8795/0.8225).
On the downside 0.8270 and 0.8250 will provide support ahead of the 0.8225 low. A break would take us to 0.8200, below which there is not a whole lot to hold the Aud up until 0.8100 and the the May 2010 lows at 0.8066.
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.
Look to sell into any strength with a SL placed above 0.0.8480.
Economic data highlights will include:
WBC Consumer Confidence, Australian Home Loans, Home Loan Investment Lending, China CPI, PPI, New Loans.
Jim Langlands
FX Charts
www.fxchartsdaily.com
