Currency Updates:
The main movements over the last 24 hours have been in the crosses with firstly the NZD getting hit pretty hard after comments from the RBNZ’s Wheeler and then the EUR rallied after less-than-terrible economic data. The market is structurally still long of NZD and short of EUR, so movements like we saw overnight might become more common.
Today’s main event is the release of Australian jobs data and this should create some volatility later this morning. Chinese CPI will also be released around the same time so watch out for the double-whammy of data.
TECHNICALS: The AUD/USD short-term outlook (see chart) remains bearish and the failure to test prior lows at 1.0220 may be telling us something about the market sentiment. Support at 1.0115 hasn’t been tested either so perhaps we are simply in a very tight consolidation period before the market decides on its next move.
CROSSES: EUR/AUD was the main mover on the crosses and the break above recent highs near 1.2900 (see chart) should open the way for further gains.
AUD/NZD bounced sharply from 1.1950 on a combination of an overly short market and the RBNZ comments but the down-trend is very strong so I expect to see a period of consolidation now between 1.20/1.2150.
ORDERS & FLOWS: Solid sell orders are reported in AUD/USD 1.0220/30 with stops above 1.0235 whilst the downside is similarly firm with Sovereign and corporate bids reported ahead of 1.0100.
INTRADAY CONCLUSION: I think we may get a downside test in AUD/USD today, especially if the jobs data or Chinese CPI disappoint. The market has turned bearish AUD on the crosses and as long as this is the case, the AUD/USD will struggle to bounce.
TRADE OF THE DAY: Sell AUD/USD rallies to 1.0215 with stop above 1.0255 looking for 1.0115 test. (I’m bearish but the risk-reward in chasing it lower from current levels simply isn’t any good).
