Currency Updates:
Overall AUD bearishness picked up a few notches yesterday with all of the major pairings breaking major support levels. A report from Goldman Sachs that the RBA will cut rates by another 50 bps this year certainly added to the bearish sentiment.
The Australian trade balance data will be released later this morning and the market is expecting a surplus of AUD215m, down from AUD307m last month
TECHNICALS: Recent lows at .9525 were breached (see chart) but the market has been unable to close below there. Nevertheless, the bears are in total control here and further losses look likely over time. Resistance levels start around .9600/10 on the day and we are back in rally-selling mode here.
CROSSES: The AUD made some big losses on the crosses, particularly against the JPY and the GBP. AUD/JPY stalled briefly near a 38.2% retracement level at 95.50 (see chart) but has closed well below there and is now targeting chart support and the 50% Fibo below 93.00.
GBP/AUD was another big mover moving back to test important weekly resistance levels near 1.6180 (see chart).
ORDERS & FLOWS: Obviously the market isn’t yet finished with its AUD selling and macro players were again noted sellers particularly against the JPY. There is talk of barrier protection ahead of .9500 in AUD/USD which could provide some support.
INTRADAY CONCLUSION: Selling rallies in the AUD is the safest bet at the moment whilst this very bearish phase is on-going. Long-term AUD long positions are still being cleaned out and as long as this is happening, its pointless fighting the trend. On the day, .9500/.9600 should probably cover it depending on how big the option defence is.
TRADE OF THE DAY: I think the USD/JPY short-term sell idea is looking a bit risky at current levels so my trade today would be to buy GBP/USD dips towards 1.5370 with stops below 1.5320, looking for 1.5500 later today.
