AUD/USD session preview Tuesday October 22nd

October 22, 2013

Currency Updates:

Deathly quiet is probably the best way to describe the FX market over the last 24 hours. There is only minor Chinese data on the economic calendar so we’re unlikely to get any volatility from there. Tonight’s NFP is the next main risk event but even that is failing to generate much enthusiasm amongst traders so we must rely on a ‘black swanlet’ to get the markets moving again. Barrier protection in AUD/JPY will be the main talking point this morning. Positions amongst short-term players are at quite low levels so we do have scope for movement if something happens to entice them into some risk.

The 50% Fibo retracement from 1.0580/.8850 comes in near .9715 and that continues to cap (see chart). The short term charts show prices topping out at present around .9680 and a break below .9630 could form a topping pattern of sorts, but again best to wait for confirmation.

AUD/JPY has broken above its 200-dma which comes in near 94.70 but is being stalled by heavy barrier protection ahead of 95.00. AUD/NZD looks to have confirmed a short-term foothold 1.1280/00 and is trying to move higher again. EUR/AUD is sitting right on short-term support levels at 1.4130 but hasn’t bounced very far.

Real-money funds are still reportedly the main buyers on dips in AUD/USD. Obviously the barrier protection ahead of 95.00 in AUD/JPY is having a major impact, with large stops reported above 95.10. EUR/AUD bids near 1.4120/25 are proving very resilient. Stops reported below .9630 in AUD/USD.

We can expect another quiet session I’m afraid but I am starting to turn slightly bearish on the AUD in the very short term. It’s running out of momentum against the EUR and the JPY so selling intraday rallies is a reasonable strategy.

Sell AUD/USD on a failure at .9715, looking for stops to be triggered below .9630 on the way to .9560ish. Remember it’s NFP tonight.

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