USD Trading Outlook (08-10-2014)

AUD/USD steady short covering squeeze continued for Europe’s morning. A bit of resistance in the 0.8810 region saw a dip towards 0.8770 into NY’s open. NY bought the dip though as US bond yields were soft. This kept steady pressure on the USD especially vs. JPY. AUD/USD lifted from the 0.8770 area, ran light stops above Europe’s high and more stops through 0.8830 to hit a 0.8835 high. The rally stalled though as the IMF lowered global econ growth forecasts and risk sentiment shifted south. The pair dipped to 0.8800 but sat near 0.8815 late in the day to leave the AUD the top performer vs. the USD on the day. China’s Sep HSBC Services PMI will get some play by traders but it’s unlikely to impact too much as the market is more attuned to the Oz Sep jobs report due tomorrow. Should both data pieces come in on the weak side, AUD/USD’s recent squeeze may be over and a return to the key 0.8660/70 area may be in order.