USD Trading Outlook (03-12-2014)

AUD/USD The pair gave up all the gains made post-RBA. Europe shrugged off the statements as well as JPY weakness to instead focus on broad base USD strength. AUD/USD slid from above 0.8520 and sat near 0.8460 as NY got going. NY applied pressure early as the USD stayed firm on rising US bond yields. A low of 0.8432 was hit and then a bounce took hold after the latest Fonterra mil auction was weak. NZD’s spike lower sent AUD/NZD rocketing up to the 1.0845 area. AUD/USD lifted towards 0.8465 but no further gains were possible as the USD held most of the day’s gains. Late in the day AUD/USD sat just below 0.8445. Traders now turn their focus to Oz Q3 GDP and China services PMIs. Should the data results come in soft, AUD/USD is likely to test 0.8400. If it breaks we’re likely to see a quick trip to the 0.8315 low from July 2010.