Currency Updates:
The EUR finally started to move overnight after lower than expected CPI and higher than expected unemployment put further easing policies back on the table. The falling EUR/USD had a knock-on effect on other major pairs and AUD/USD fell to test the previous day’s lows below .9450. Australian PPI data will be followed at lunch-time by HSBC Chinese manufacturing PMI so we should have a fairly busy day.
The market is looking to test hourly lows near .9440 and the next AUD/USD support levels below there are at .9420 and .9390 (see chart). The medium-term trend is bullish but the short term trend is bearish. I still have a strong bias towards buying-big-dips but with no sign of any short term base emerging, I will need to stay patient. Resistance levels are now strengthening at .9520/30.
More very mixed results for the AUD on the crosses, making very strong gains against the crumbling EUR but falling slightly against the NZD and the GBP. Technical resistance at 1.4560 in EUR/AUD was sharply rejected and prices are back at mid-range levels near 1.4350 (see chart). AUD/NZD is looking soft again and will really be testing the patience of the bulls out there. AUD/JPY refuses to stray too far from 93.00 but overall I prefer to buy big dips here also (if and when it decides to move).
Strong bids reported yesterday .9410/20, likely Sovereign interest, and I’m presuming that these orders are still live.
The early focus will be on the downside and we may well get a test lower first to see how strong the reported bids are at .9410/20. It’s Friday, no-one will hold positions, so expect a reversal in the afternoon. I’m looking for a .9390/.9480 range.
I’d play EUR/USD from the short side during Asia. There has been little or no bounce since the fall began so look for a test of levels nearer 1.3500 before day’s end. Sell any early Asian profit-taking rallies towards 1.3610/20.
