USD Trading Outlook (27-06-2014)

AUD/USD Sideways chop continues in AUDUSD. Shanghai A shares saved themselves..again…right on the year-long uptrend line, which turned out to be fortuitous for the All-Ords, that had a look at the 200 dma support this week. Combine that with a miss in the Personal Spending component of the US PCE data and it put a dagger to the bond bears and calmed the waters further across the carry currencies. The downside threat to Oz remains the loss of support in the domestic rate market as well as some potential trouble in major asset markets. The European stock and bond markets have given back all of their ECB gains and key reversals in Canada and the US from Tuesday are still in play. Bottom line is that the risk-on/risk-off game is at a deadlock, but whichever way it breaks, the AUD is sure to follow.