USD Trading Outlook (21-10-2014)

AUD/USD An bout of JPY strength in early NY saw AUD/USD slip from just above 0.7880, pierce the 200-hour MA and touch a NY low of 0.8758. The dip reversed though as broad USD softness trumped JPY strength. The pair began climbing off the low and took out the overnight highs. A session high of 0.8798 was eventually hit as the USD stayed heavy and risk sentiment was buoyed by rising equity markets. Very little pullback from the high was seen and the pair sat just above 0.8795 late in the day. Traders now turn their attention to the RBA minutes and China econ data. The RBA is likely to harp on AUD strength but this may see only limited pressure applied to AUD as the market is used to hearing that rhetoric from the RBA. The China data is likely to have a bigger impact. Q3 GDP is f/s to slip to 7.2% from 7.5% while Sep retail sales are f/c at 11.8% vs. the prior 11.9%. Should the data see a downside miss AUD should turn heavy. Today’s gains might then be erased and sub-0.8700 levels may be tested ahead of AU Q3 CPI due on Oct 24.