AUD/USD: 0.8220EUR/USD: 1.2440The dollar remained mostly rangebound again today ahead of the FOMC, with the exception of the Yen which made gains on most fronts on the back of safe haven buying because of a selloff in oil and stocks, in increasingly illiquid conditions. Gold and Silver took a hit in late US trade, both falling quite sharply. Today sees a fair bit of action, starting in Australia with the RBA Minutes/Debelle speech. Later we get the global Mfg PMI's starting with China (HSBC). The UK sees the CPI, as well as Mark Carney who will be speaking, delivering the Financial Stability report. From Germany comes the ZEW Economic Sentiment Survey while from the US we get the Building Permits/Housing Starts.
The Aud remained heavy on Monday, although activity was muted due to the Sydney CBD siege taking place next door to the RBA, but it has so far managed to hold above the strong support at 0.8200. The MYEFO got lost amidst all the other news and had little overall effect on the price.
Traders will now turn their focus to today’s RBA minutes and a speech from the RBA's Debelle, where the market will be looking to see whether he maintains the recent mantra of trying to talk the Aud lower. Later on the HSBC Mfg PMI will come into focus, after which the market will most likely settle to wait for tomorrow's FOMC.
In the meantime, a break of 0.8200 would potentially see an acceleration lower, towards a wave equality target at 0.8145 (AB=CD; from 0.9398 to 0.8642, from 0.8901), beneath which there is little to hold the Aud up until the May 2010 lows at 0.8066.
Although I think the Aud is heading (a lot) lower in the course of time, the short term momentum indicators are warning us not to become overly bearish right now and do show some minor bullish divergence so some near term caution is warranted on the downside.
The topside will see minor resistance at the session high of 0.8267 and then at the 100 HMA at 0.8275. Above here would then look to test the descending trend/200 HMA resistances at 0.8300. A break of this would head on towards 0.8331 (daily Tenkan) and 0.8338 (23.6% of 0.8795/0.8200) and then to last week’s peak at 0.8375, beyond which would take a run towards 0.8400, and which if seen would be a good medium term sell, I suspect.
Economic data highlights will include:
RBA Minutes, HSBC Flash China Mfg PMI.
Jim LanglandsFX Charts www.fxchartsdaily.com
