Currency Updates:
Messy, choppy markets are still the order of the day and neither fundamentals nor technicals seem to be driving the market. Headlines, like the one from the PBOC yesterday late-afternoon that they will expand the Yuan trading band, are influencing traders. The economic calendar has NZ PPI, Japanese trade data, and a speech by RBA’s Guy Debelle. The recent trend of very tight ranges followed by headline driven spikes is likely to continue.
Initial resistance comes in now at a 38.2% Fibo near .9455 (see chart) but I find technicals in general to be quite untrustworthy in choppy sideways markets. I would still look to longer-term charts for signals but I tend to ignore the short term stuff. Pick a possible range and place your orders right on the extremities, that’s how to trade these types of markets in my view.
AUD/NZD support at 1.1190 has held yet again and risk-reward would definitely seem to favour the buy-dip strategy. AUD/JPY took out short-term resistance at 94.10 but further sideways consolidation is favoured until something happens to take out major resistance at 95.50. EUR/AUD is another pair stuck in choppy sideways trade and its best to wait for range extremities here.
Talk of sizeable stops above 94.50 in AUD/JPY but otherwise the ‘orders’ grapevine is quiet. Decent bids in USD/CAD at 1.0450 also worth watching.
Pick a range and trade the edges. Rallies towards .9455/60 will probably run into technical sellers and dips back under .9400 will attract bids from an intra-week market that’s modestly short of AUD. I’m still in buy-big-dip camp just in case any unexpected developments/statements drive it lower.
NZD/JPY is not near the top of my ‘favourite pairs’ list but the risk reward in selling rallies towards 84.00 with stops above 84.30 certainly has potential (see chart). AUD/NZD support at 1.1200 looks stronger by the day and this will also weigh on the Kiwi.
