Currency Updates:
The short-term bullish AUD sentiment was rudely shattered yesterday by some poor unemployment data. The market got itself long in anticipation of a good number and there was talk of very large stops above .9350. This all came to nothing after the data and the AUD got smashed across the board, but particularly against the Yen. The buoyant NZD has helped the AUD to steady in overnight trade but it still looks vulnerable on the crosses. There is nothing of note on today’s economic calendar.
TECHNICALS: Resistance on the daily chart at .9350 has been confirmed and this level must be given a large amount of respect. The short-term charts are showing a solid up-trend but we may be seeing a reversal and the first big level to watch is at .9175 (see chart).
CROSSES: AUD/NZD reversed very sharply yesterday with the NZD getting a boost from a more hawkish than expected RBNZ and the AUD suffering due to jobs data. My expectation of a test of 1.1760 is looking less likely but the bears need to break below 1.1150 to generate more momentum. Range trading favoured. AUD/JPY broke below its consolidation level and I’m looking to sell rallies towards 93.00 for a test of 90.10 in coming sessions (see chart).
ORDERS & FLOWS: Not of interest to report in the AUD/USD but significant Sovereign and corporate buying in both EUR/AUD and GBP/AUD continues to have an impact.
INTRADAY CONCLUSION: After yesterday’s events I am now in the sell-AUD-rally camp, but primarily on the crosses as I’m still not a big fan of the USD especially pre-FOMC. Sell AUD/JPY near 93.00 or buy GBP/AUD near 1.6950.
TRADE OF THE DAY: There are a few which catch my eye this morning; buy cable near 1.5770 with a tight stop below 1.5740 or buy EUR/USD near 1.3260 also with a tight stop below 1.3220 looking for 1.3400.
