USD Trading Outlook (24-09-2014)

AUD/USD Two attempts in Europe’s morning to clear the 0.8930 were made after China’s PMI beat forecasts. The attempts failed though. An abatement of USD weakness and offers touted in the 0.8930/50 area capped the pair at 0.8927. The effects of China’ PMI beat began wearing off and the pair slid to sit near 0.8915 at NY’s open. NY applied bear pressure as commodities and commodity currencies were generally offered while the USD rebound persisted. The slide cleared the 0.8850 barrier even as US bond yields were heavy. Spec stops were run and the pair hit a new trend low of 0.8831. Very little bounce was seen & the pair sat near 0.8840 late in the day. There is no major OZ data due that would aid to stem the slide so technicals and USD interest are the likely drivers for the pair. Day/week RSIs are o/s but maintain a bear bias and the pair is pulling away from the 76.4 Fib of 0.8660-0.9505. Narrowing yield spreads are adding weight as well. The pair looks set to test levels from Feb 4 which is the date Stevens dropped the easing bias. The low that day was 0.8730. Below that targets 0.8660.