Currency Updates:
AUD/USD Europe smashed AUD across the board after the RBA’s Lowe commented that the AUD was high and noted the RBA was in a fortunate position that it could lower rates if needed. AUD/USD dived from the 0.8610 area towards 0.8525 before bouncing near 0.8545 into Ny’s open. NY applied pressure early after GDP beat estimates. 0.8514 was hit but bears ran couldn’t press further as the USD’s post-data gains faded. The pair rebounded above 0.8550 but sellers emerged. They’re noted in the 0.8550/70 zone for now. A spike up in EUR saw EUR/AUD buyers clear the 200-DMA and touch the 1.4640/45 area. This saw AUD/USD make a trip back towards the low. Very little bounce was seen and the pair sat just above the day’s low late in the day. The technical outlook grows bearish as day/week RSIs weigh, s-t T-L support is broken and the pair accelerates lower from the 38.2 Fib of 0.4775-1.1081. Loads of US data are due tomorrow. If the results show a solid US econ AUD/USD’s slide will press on. Bears are targeting the May 2010 low.
EUR/USD A tight range held in Europe and the pair sat near 1.2435 towards NY’s open after drifting lower from the 1.2445/50 area. Early NY saw a quick dive near 1.2400 after the above f/c US GDP lifted US bond yields as well as the USD. Fast money and intra-day names were the noted buyers and there was little downside follow through. US yield gave up some gains and EUR/USD began clawing back some losses. The lift’s pace increased as short covering in EUR (EUR//AUD noted buys) saw stops above 1.2445 run. Another leg up ensued after US consumer confidence came in below f/c and US bond yields gave up post-GDP gains. EUR/USD pierced the 200-HMA and hit a 1.2487 high. Only a small pullback was seen as the pair spent the afternoon consolidating just below the 200-HMA. Traders now look to the large amount of US data due tomorrow. Should the result show good econ growth it’s likely EUR/USD get tapped lower. A return towards 1.2350/60 support might then ensue.
USD/JPY Profit-taking on short yen trades was widespread Tuesday, as crowded spec trades come in for corrections ahead of the holidays and year-end. AUD/JPY led the descent and is flashing several sell signals heading into the day’s close. For a change, even USD/JPY gave up some ground. The dollar generally looked wanting after an unexpected upward revision to US GDP failed provide the it with lasting support. USD/JPY initially popped to 118.29 on the release, but quickly fell back as Tsy yields remained soft and N225 futures were unable to improve on their London highs. A weak Consumer Confidence report reinforced the profit-taking in long USD positions, though the 117.69 o/n low remains intact thus far as trading interest wanes ahead of the NY holiday on Thursday. Unless there is a wash-out in risk, something the AUD/JPY is intimating, USD/JPY downside will be ltd by QQE2 and GPIF flows. EUR/JPY was rescued by a squeeze up in EUR/USD when Monday’s double-bottom couldn’t be threatened after the US GDP beat. Daily Tenkan at 146.35 offered support. Dailies are wobbling, but the uptrend’s intact while closes are above the Tenkan.
Looking Ahead – Economic Data (GMT)
• 00:30 AU Construction Work Done Q3 f/c -1%, -1.20%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
