Currency Updates:
We’ve had a very quiet start to the trading week in early interbank markets, with the major pairings hardly trading at all. All of the market’s focus is still on the US; the temporary government shutdown has affected sentiment on many levels and any possibility of some tapering by the Fed in early 2014 is starting to recede. US rates are starting to slide again and this is both USD-negative and risk-positive, a double-whammy for the AUD/USD. RBA Governor Stevens didn’t spend too much time trying to talk down the AUD, another bullish sign. The next big risk event is tomorrow’s NFP.
The obvious technical target is the 50% retracement level at .9710 (see chart). The longer term charts suggest that a test of 1.000/1.0120 is likely so buying dips is the clear bias. Support levels start firstly at .9640 getting stronger at prior highs near .9525.
AUD/JPY has broken marginally above previous trend highs at 94.45 but is stalling ahead of its 200-dma which comes in near 94.70. Further gains are looking likely but buy dips not breaks. AUD/NZD looks to have confirmed a short-term foothold 1.1280/00 and is trying to move higher again. EUR/AUD is sitting right on short-term support levels at 1.4130 (see chart).
Real-money funds are still the main buyers in AUD and it looks like some of the bigger fixed-interest players are switching back into Australian debt. Profit takers are reportedly solid between .9700/20.
I’m still in dip-buying mode but with resistance levels looming against the EUR, JPY and USD, we may indeed get a dip over the next 3 to 4 sessions. I’d play .9635/.9715 on the wide during today’s Asian session.
I’m still in the USD bear camp and it’s as always a matter of picking the right vehicle. Trade should be quiet ahead of tomorrow’s NFP so maybe look to the crosses for some value? Sell AUD/JPY near current 94.60 levels with a stop above 95.00 looking for 93.00.
