Currency Updates:
The AUD continued to claw back some lost ground, particularly on the crosses, but this move seems to be more stop-loss related rather than any fundamental strengthening of AUD sentiment. Metal prices remain very weak and this weighed on the AUD at times, but with the overall short-positioning still at extreme levels, it’s proving difficult for the AUD to make any fresh lows.
The NZD trade balance is the main event on the economic calendar.
TECHNICALS: The hourlies are showing a series of higher lows (see chart) which show that some strength is finally returning. Nevertheless, the fact that it broke above previous lows at .9325 but then immediately retraced almost 100 pips is a confusing signal. There is no clear sign of any basing formation developing so it looks like we are in a classic consolidation phase.
CROSSES: AUD/NZD backed off from 1.2000 very sharply and I think this cross will continue to show a lot of weakness in coming weeks. On the other hand, the AUD made decent gains against the EUR and that weekly top at 1.4400 is looking stronger by the day (see chart). AUD/JPY has been quite active but not showing very much movement overall and once again opens near 90.50.
ORDERS & FLOWS: Trailing stop-losses were the order of the day and heavy stops were triggered yesterday evening from .9310 through .9340.
INTRADAY CONCLUSION: We’ve been seeing 100 pip ranges over the last few sessions with gradually rising bases so I’m expecting some more of the same. Perhaps a .9260/.9360 type range for the rest of today and as we are near the base of this, I’d trade with a bullish bias today in Asia.
TRADE OF THE DAY: I like the look of the NZD/USD and suggest long positions near present levels .7780 with stops below .7710 looking for .7950.
