USD Trading Outlook (16-07-2014)

AUD/USD Once Europe got going and saw the boost from the RBA minutes faded and the improved China loan data was shrugged off they smacked AUD/USD down fairly hard. Bears took the pair from near the 21-DMA (0.9398) to just below 0.9360 before the pair bounced near 0.9375 into NY’s open. Light short covering persisted in early NY as the headline US retail sales number missed. The pair stayed firm into Yellen’s testimony & sat near 0.9380. Her prepared text stated a high degree of accommodation is appropriate. The USD spiked lower and AUD/USD lifted but couldn’t breach 0.9400. The pair began giving back gains as US yields gave back earlier losses and Yellen’s Q&A session tilted a bit hawkish. AUD/USD’s slide gathered pace and hit a 0.9348 low that matched the 55-DMA. A bounce ensued as US yields pulled back fro their highs and stocks were firm. Late in the day the pair sat near 0.9370 to leave it down over 0.20% on the day. Traders now look to China’s Q2 GDP later. A soft reading might send AUD/USD through the 55-DMA and below key support near 0.9320.