Currency Updates:
The AUD has been one of the big losers in the currency markets, alongside the Yen, over the last 24 hours. The Yen was affected by continued soft monetary policy by the BOJ which led to major technical breaks higher in pairs like GBP/JPY and EUR/JPY. The AUD was firstly influenced by weaker-than-expected HSBC china PMI data and then by typical verbal intervention in a speech by Glenn Stevens. Not much on today’s economic calendar so we must look to pre-weekend flows for some volatility.
The market is currently testing technical support levels near .9225 (see chart) but an inability to close below there would suggest that bearish momentum isn’t overly strong. There are more technical support levels at .9195/00. Resistance levels will start intraday at .9285/90.
EUR/AUD made a significant move higher taking out recent trend highs at 1.4550 (see chart). AUD/JPY and AUD/NZD remain inside well-defined ranges with all 3 currencies currently out of favour in the FX market; AUD/NZD is drifting lower inside its hourly ranges but still needs to break below 1.1190 in order to generate fresh impetus whilst AUD/JPY is trendless inside short-term parameters at 92.25/94.75. GBP/AUD was another pair to make significant moves higher.
Most of the big stop-loss sell orders seem to have been done already in pairs like AUD/USD and EUR/AUD. Modest bids are reported at .9200 this morning.
The big break in the AUD crosses has certainly clouded my AUD/USD buy-dips view. If pairs like GBP/AUD continue to move higher then AUD/USD will remain heavy. Nevertheless, after a 250 pip fall this week I’m of the opinion that it’s fallen far enough. Play an intraday .9200/80 range with a bullish bias.
Look for a test of 1.6250/60 later today in cable. Play it from the long side, expecting support near 1.6140 to emerge during Asia and a move higher to eventuate during European trade.
