Currency Updates:
It will be a busy day for the AUD with retail sales in the morning (+0.4% MoM expected for November) and the RBA rate decision in the afternoon (no change in policy expected). The AUD/USD is not much changed from yesterday morning with the market focussing on other currencies. We saw a surge in the GBP during Asian trade followed by strong surges in the NZD and the USD. Strong data from the US should give the USD a bid-tone for the rest of the week pre-NFP.
There has been no change from yesterday with a strong technical support level at .9060, which is the 76.4% retracement of the rally from .8845 to .9750, still providing the base. The short-term charts remain bearish but seem to be entering a consolidation phase (see chart). Strong technical resistance sits at .9250/75.
Another very busy day on the AUD crosses with AUD/NZD rejecting the 1.1200 level and returning to bear-mode but pairs like AUD/JPY making decent gains. AUD/NZD seems certain to test large optionality at 1.1000 in coming days. AUD/JPY has been trading sideways for some weeks and really needs to break above the 200-dma at 94.40 in order to gain fresh momentum. EUR/AUD is starting to look bearish having rejected levels above 1.50 yet again.
Japanese buyers returned to AUD/JPY yesterday and bids are reported at 93.25. Stop-loss sell orders are expected to be large in AUD/USD below .9050.
We should see plenty of volatility today with major risk events for the AUD. I think we may see the AUD make further gains against the JPY and EUR in particular but if AUD/USD breaks below .9050, then the AUD bears will return.
Yesterday’s short trade in EUR/AUD worked very nicely and I would try the same again today. Look to sell rallies back towards 1.4900/10. The NZD looks to be an even better buy that the AUD and NZD/JPY might also be worth a look; it’s risky given the vertical nature of yesterday’s move so keep trailing stops tight if going long.
