Currency Updates:
It’s been another very quiet 24 hours in the FX market and the big storms in Europe undoubtedly kept many participants away from their screens. The RBA Governor will be giving a speech this morning and we should watch for headlines which might affect the AUD (no doubt he will try and talk it down a bit). I can’t help feeling that we are soon due for another big move and I expect the focus to remain on the USD; either big levels hold against the other majors or the greenback will fall another 5% before year’s end.
Previous highs and a 50% retracement level will offer strong support near .9520 (see chart) and a clean break below there would suggest that the top near the 200-dma is a strong one indeed. Resistance levels are firming on the short-term charts near .9620.
EUR/AUD looks to me to be the most interesting of the crosses with a possible short-term topping formation below technical resistance at 1.4420/50 but its GBP/AUD I’m looking to trade (see trade-of-the-day below). AUD/NZD is in quiet consolidation above 1.1500 but I’m still in the buy-dips camp for a test of 1.1650. AUD/JPY is also directionless in the very short-term but this is one pair that has made a bullish break imho and I favour buying any deep dips.
Real money funds expected to buy AUD/USD near .9550 with more bids reported near .9535. I think it’s also very likely that there will be trailing stops in reasonable size below .9510 but I have no confirmation.
Picking the important 100-pip range levels is a bit easier today and I’d suggest a range between .9520/.9620 with a modest bearish bias on the session. The market does like to test out important levels when it gets the chance.
I’m going against my recent bias here, but GBP/AUD looks like it could be ready to turn lower in the short-term. There is usually some heavy GBP selling against the EUR at this time of the month and with EUR/AUD looking technically ‘toppy’, I favour being short GBP/AUD at current levels near 1.6855 with stops above 1.6900.
