USD Trading Outlook (02-10-2014)

AUD/USD Most of the gains posted after AUD/USD bounced off big support in the 0.8660/70 zone were eroded as NY got going. Europe dropped the pair from near 0.8730 and it sat near 0.8695 into NY’s open. The pair looked set to drop further as ADP beats forecasts but the market ignored the data and focused on US bond yields instead. Yields dropped quickly shortly after the data. Broad base USD sales took hold and AUD/USD again tested near 0.8730. The level broke as ISM and construction spending came in below estimates. The pair hit a NY high of 0.8748. The pair then dived down to 0.8705. An article by the Herald Sun’s McCrann stating the retail sales data could justify an RBA cut as well as a sinking NZD due to weak milk prices seemed to be the culprits to lower the pair. The dip didn’t last long though as US yields and the USD remained under pressure. AUD/USD sat just below 0.8740 late in the day. Traders now look to Oz Aug. trade data & building permits for their cue in Asia. Weak results should see the pair make a move back to the 0.8660/70 area.