Currency Updates:
We’ve had a quiet opening to the trading week apart from a 30 pip spike higher in USD/JPY (caused by technical buying after the failure to close below the well-watched 200-dma). Risk appetite remains remarkably resilient across most financial markets and overall USD bearish sentiment is still intact. New Zealand is enjoying a long weekend thanks to their Labour Day holiday and the economic calendar looks quite bare.
The important technical levels are very clear to see on the daily (see chart) with support now at previous resistance levels near .9510/20 and resistance at .9715/40. Patience is required inside of this range and the shorter-term support/resistance levels are now to be found at .9570/.9670.
AUD/NZD has made a strong weekly close above 1.1500 and continues to grind slowly higher. The next resistance level to watch is a daily high near 1.1650. AUD/JPY is treading water near 93.50 but I’m still in the buy-big-dip camp here. The AUD looks weak against the EUR, with EUR/AUD trying hard to break back above its 100-dma at 1.4400.
Real money funds expected to buy AUD/USD near .9550. Macro funds reportedly selling above .9675.
Once again I think it’s going to be a case of picking the 100 pip range over a 24 hour period. In fact I think we might struggle to get even that much volatility but .9550/.9650 should cover most eventualities. Risk appetite remains strong which should support AUD/USD on dips but we’ve come a long way in a short time from .89 cents so little wonder that the market is resting.
I quite like the look of EUR/JPY and more gains are likely in my view but patience will be required. Buy intraday dips to 134.40 keeping stops below 133.80, looking for a test of 135.50. AUD/NZD still looks like a very straightforward buy-dips proposition and levels near 1.1500 now offer decent value.
