Currency Updates:
Reports started to emerge from the US yesterday afternoon that a debt-deal of sorts might soon be signed and postpone any talk of an imminent default. This led to a surge in typical ‘risk-on’ trades like AUD/JPY. Today will be all about positional adjustment ahead of the weekend. There isn’t much of note on today’s economic calendar but we will need to be wary of juicy headlines on the newswires relating to the debt negotiations. The G20 FinMins are also meeting today.
TECHNICALS: The short-term charts tried to break lower yesterday but stalled at recent hourly lows near .9390 (see chart). Short-term resistance levels are also pretty clear starting at .9480 and up through .9525. We really need to see a clean break outside of this range in order to get fresh momentum but for now the default trade is in line with the bull trend.
CROSSES: The AUD made some strong gains on the crosses particularly against the JPY and the NZD. We should remember that AUD/JPY has a potential basing pattern in place and despite the sideways movement of recent weeks, the trend is most likely still bullish. AUD/NZD broke above short-term resistance levels near 1.1415/30 but the bulls will be disappointed that it didn’t close above. The target here is at 1.1550.
ORDERS & FLOWS: There are plenty of sell orders reported above the market, starting at .9480 through .9525. This is common knowledge yet the market isn’t dipping much, usually a bullish sign.
INTRADAY CONCLUSION: Stick with the range-trading bias in AUD/USD for now but still err on the bull side of the market. A range between .9430/.9510 should cover it during Asian trade.
TRADE OF THE DAY: I got the EUR/JPY wrong yesterday so not feeling overly confident. The Yen weakness of the last 24-hours has been quite impulsive and there could be more to come. Buy dips in AUD/JPY towards 92.20 with stops below 91.80.
