Currency Updates:
The AUD enjoyed a recovery day yesterday with shorts covering ahead of another speech from Ben Bernanke tomorrow. The Aussie was the best performing of the major currencies and the bears will undoubtedly be getting a little nervous. Much of the bearish AUD sentiment has been based on negative China-rhetoric but once the bad news dries up then the AUD-sellers will start to cover.
BOJ minutes today are unlikely to contain any surprises so look to headlines out of China for guidance on the day.
TECHNICALS: There are fairly obvious range edges now at .9000/.9350 (see chart) and with the dailies so heavily oversold according to nearly every indicator, I’m maintaining my bullish bias. The very short-term charts are in a bullish phase and buying any dips back towards .9180 makes sense there.
CROSSES: EUR/AUD has fallen back towards 1.4200 and this raises the possibility that the break above 1.4400 was a false one. This pair should stay volatile and a 1.39/1.44 range should cover most eventualities in coming days. AUD/JPY has also recovered nicely and support at 89.00/50 is still the key level to watch, with resistance now at 93.00. If AUD/NZD can break back above 1.1800 it would indicate that an interim base has been formed.
ORDERS & FLOWS: Plenty of flows reported overnight, and pretty much all in the same direction, with short-covering by speculative players the main driver. No big order levels close by in the AUD/USD.
INTRADAY CONCLUSION: Buy intraday dips to .9180 for a re-test of .9300. Alternatively, the bears can try selling any rallies towards .9300 with stops above .9350. I’m sticking with my bullish bias; I think the AUD will eventually break back higher towards .96/.98.
TRADE OF THE DAY: USD/JPY is due for a downside shake-out I think. I think selling near 99.30/40, looking for 98.30 with a stop above 99.75 makes good risk-reward sense.
