Currency Updates:
The FX market remains in Limbo as the US government shutdown continues and the countdown towards October 17th, and a possible US government default on some debt obligations, ticks away. There was some movement in crosses like GBP/AUD as traders preferred to trade non-USD pairs. Australian consumer confidence data might be good for a bit of volatility but I think we can expect another quiet session (unless the large reported stops in USD/JPY below 96.50 go off).
TECHNICALS: Still no change in the overall technical pictureover the last few days and the obvious technical levels to watch are still at .9280 and .9525 (see chart). The short-term charts are starting to look mildly bullish with higher highs and higher lows. I favour buying deeper dips based on these factors.
CROSSES: GBP/AUD was particularly volatile (compared to the rest of the market), dropping from 1.7050 to 1.6950 before recovering these losses plus a bit more (see chart). I think we are seeing the market looking to non-USD pairs for some volatility and hence these moves. AUD/NZD continues to grind higher on the back of NZD selling by a big Swiss account. AUD/JPY support at 90.00/50 will surely be tested in coming days?
ORDERS & FLOWS: No big orders are being reported close to the market in AUD/USD, with bids being patient and sitting below .9350 and offers still solid above .9500.
INTRADAY CONCLUSION: More range trading to come and we need to look to the Yen crosses for volatility. Much will again depend on what happens in USD/JPY. I’m still firmly in the sell-USD-rally across the board.
TRADE OF THE DAY: Same as yesterday so patience needed in AUD/JPY which has some very strong technical support towards 90.00. Wait for exhaustive intraday dips and keep stops well below 90.00. Another good risk-reward play is to buy AUD/NZD on dips towards 1.1325 keeping stops tight below 1.1300.
