Currency Updates:
Weakness in commodity and precious metal market would seem to have been the main cause of overnight AUD weakness and as always in a bear market, traders only focus on the bad news. Sovereign buyers managed to hold the pair above .9800 but with little or no bounces forthcoming there seems little reason for the bears to abandon their strategies.
The economic calendar is pretty bare again today so we will rely on flows and positional adjustments for movement today during Asia.
TECHNICALS: The weekly trendline near .9870 has been broken and this level now becomes the first point of resistance. Short term charts are trying to base near .9800 (see chart) but the bears still have the stronger case.
CROSSES: GBP/AUD continues with its very impressive recovery and the next target there is at 1.5675 (see chart). The daily SMAs have all turned bullish on this cross and we could be in for some very sharp moves higher.
AUD/JPY has broken below short-term support at 100.40 but there is more support at the base of a wedge formation near 99.75 (see chart).
AUD/NZD just failed to re-test swing lows at 1.1950 and has bounced back above 1.2000, with more range trading favoured here although in an overall bear trend.
ORDERS & FLOWS: The main thing to look for is the Sovereign buying interest in AUD/USD around .9800. This started yesterday in London at .9830 and has been regularly appearing on the bid every 5/10 pips.
INTRADAY CONCLUSION: Yesterday’s bearish momentum took me by surprise and the fact that we have seen little or no bounce makes me think that the bears will remain in control for now. Previous support between .9850/70 is the first resistance level and should cap intraday rallies whereas a clean break below .9800 will lead to an increase in bearish momentum.
TRADE OF THE DAY: GBP/NZD sounds like a very exotic cross, and it is, but after looking at the long term charts, this pair has scope for some big moves higher. Buy any intraday dips is my trade of the day!
