Currency Updates:
The big orders in the AUD/USD either side of .9150/.9250 did indeed ensure a real battle, firstly at the upper end of the range and later on at the lower end. Talk of international asset managers bailing out of local markets gave the embattled AUD a very bearish feel at times but strong bids from Asian central banks stopped the bleeding.
The economic calendar is bare again so we will look to developments on the Chinese credit markets and also of course on Australian asset markets for leads.
TECHNICALS: The short-term battle for supremacy near .9200 seems to have been won by the bulls and I believe we are now due for a decent retracement to .9620 at least (see chart). Initial resistance will be at previous lows near .9325 and I’d expect short-term support to now form near .9220/30.
CROSSES: AUD/NZD is still in a solid down-trend and this current bounce should run out of steam near 1.2000. AUD/JPY, just like AUD/USD, has also run out of bearish momentum in my opinion and is due for a sharp retracement as well, back towards 93.50 at least (see chart). EUR/AUD also looks technically ‘tired’ and I’m expecting prices to move back toward more short-term neutral levels below 1.40.
ORDERS & FLOWS: Most of the big order levels were tested yesterday but the fact that we have closed back above .9250 suggests that the buy orders were bigger. Not hearing many reports this morning so the big ammunition might have been spent already.
INTRADAY CONCLUSION: I’m bullish. I think the AUD is heavily oversold and I expect to see some sharp rallies in coming days. Look for AUD/USD support to emerge at .9220/30 and for a base to form for next leg higher. Resistance at .9325 will prove tough initially.
TRADE OF THE DAY: Buy AUD/USD at .9235 with stop-loss below .9200 looking for intraday test of .9325.
