Currency Updates:
Yet more meetings in the White House have raised expectations that some announcement regarding an end to the debt-deal impasse might soon happen. The AUD/USD spiked higher above .9500, which had more to do with dealers breaking through an option barrier rather than any reaction to events in Washington. The latest RBA meeting minutes will be released today but all eyes and ears will be on the White House for any sign of a deal.
The break above short-term resistance levels at .9480/85 put the focus back on recent highs near .9525. Look for support to emerge now near .9430 (see chart). A clean break above .9525 would put the focus back on the longer-term charts and the next resistance near .9710.
AUD/NZD triggered stop-loss sell orders below 1.1300 last evening but solid bids were reported near 1.1280 and the cross recovered immediately. AUD/JPY has broken and closed above previous resistance at 93.40 and the next target is at recent trend highs near 94.40. EUR/AUD is stuck in sideways mode but AUD/CHF is starting to generate some interest. It rallied strongly last night but stalled again near .8650.
Sizeable bids reported near 1.1280 in AUD/NZD. Sell orders are still reportedly solid in AUD/USD around .9520/25 and again near .9550.
At this stage I think it is much riskier to be long USD than it is to be short. Certainly we will see a spike up in the USD if/when a deal is announced but any USD rallies are medium-term selling opportunities in my view. I would try to keep my AUD/USD exposure as low as possible and wait for big swings for a trading opportunity.
Firstly I would suggest that you avoid all the USD and risk pairs whilst the US stand-off is going on. If you really want to trade, then look to neutral pairs like AUD/NZD and I have a definite buy-dips bias towards 1.1280 keeping stops fairly tight.
