Currency Updates:
It’s been a quiet start to the trading week with the AUD/USD sitting quietly near .9185. There are opposing factors at play in the AUD market; rising US yields and falling global equity markets are AUD-negative but sharp rises in metals markets and a steadying of Chinese economic data are AUD-positive signals. The fact remains that the AUD market is still very short and unless some very bad news happens prior to the general election we are likely to see this period of .90/.93 consolidation continue with definite top-side risk. There is nothing of note on today’s economic calendar.
TECHNICALS: The sideways consolidation continues whilst the market is working through its heavily oversold daily indicators. Most immediate resistance is at .9220, with stronger levels near .9320. Support levels should be solid near .9060 and getting much stronger near .9000 (see chart).
CROSSES: AUD/JPY is one pair which is behaving according to its technical signals; it broke though medium-term resistance levels and then retraced exactly 38.2% (see chart). EUR/AUD is in the middle of its short-term consolidation between important levels at 1.4350/1.4750 and its best to sit and wait on this cross. Similarly, AUD/NZD should trade 1.12/1.15 but the bias remains bearish for a test of 1.10.
ORDERS & FLOWS: Stop-loss buy orders reported above .9240 in AUD/USD. AUD/NZD sell orders 1.1500/50.
INTRADAY CONCLUSION: I expect to see further volatile consolidation in the AUD/USD between .90/.93 over the coming week as the market fluctuates between risk aversion and USD selling. I think we will see buying emerge .9130/40 and we may get a test of those reported stops above .9240. But today may stay very quiet so be also prepared for a tight 30/40 pip trading session.
TRADE OF THE DAY: AUD/JPY is starting to treat us well so I like sticking with the same trade, buy intraday dips to 89.00 with stops below 88.60. I also like the bearish EUR/GBP play, so I’m looking to sell intraday rallies to .8560 with stops above .8600.
