Currency Updates:
The AUD had a day of consolidation yesterday, although it will close below 1.1190 against the NZD which is definitely a bearish indicator. There isn’t much on the economic calendar apart from BOJ monetary policy minutes but watch out for headlines on the newswires this morning from the RBA deputy Governor who is giving a speech at 9:15 AEDT. He will indulge in a bit of verbal intervention no doubt.
After an almost vertical fall, the hourly chart looks like it’s taking a breather and we could see a modest retracement back towards Friday’s highs and a 38.2% near .9245 (see chart). There is more short-term resistance ahead of there at .9185/00 and support levels start at yesterday’s lows near .9120. The downside technical target is a 76.4% retracement level at .9060.
AUD/NZD will close below its previously stubborn lows at 1.1190 and risk-reward surely favours the bears near current levels. There is large optionality reported at 1.1000 and this should prove magnetic in coming days. GBP/AUD has finally taken a breather from its vertical take-off trajectory but any dips towards the first Fibo at 1.7500 must be considered buying opportunities. AUD/JPY is still trading sideways near 93.00 but this won’t last and a big move is surely coming here also.
Real money funds have been notable sellers of the AUD as indeed have some of the big option players, forced to adjust their hedges by the impulsive weakness.
We may have a few sessions respite from the incessant AUD bearishness but if Deputy Governor Lowe ramps up the verbal intervention then we will be back to the same old script again. If bearish, try selling on approach to .9200 with tight stops and then try again at .9245/50. If bullish, be patient and wait and see what happens at .9060.
Not my favourite pair to trade, but the risk-reward for NZD/USD bulls looks quite appealing. I prefer to play this pair from long side; buy near .8180/00 with stops below .8120 looking for levels above .8300 in coming sessions.
