Currency Updates:
The FX market finally kicked into gear again after overnight US jobs data convinced the market that any tapering by the new Fed Chairperson isn’t likely to happen anytime soon. The USD fell across the board and risk trades like the Yen crosses were bought heavily. The AUD has surprisingly underperformed a little but this could be because it had already made a lot of gains in previous week and is starting to tire. The main event on today’s calendar will be the CPI data but I can’t imagine it affecting the interest rate debate.
The 50% Fibo retracement from 1.0580/.8850 comes in near .9715 and the market is respecting this level and it’s attracting some profit takers (see chart). The 200-DMA sits near .9750 and this will also provide resistance. Short-term charts are exhibiting overbought tendencies and we may see a period of consolidation whilst they unwind. Support levels start now at .9630.
AUD/JPY has broken and closed above its 200-dma which comes in near 94.70 and is starting to look very bullish indeed. EUR/AUD (see chart) has bounced off strong short-term support near 1.4125 and the strength of the flows in this cross really need to be respected. AUD/NZD has again pulled back off highs near 1.1450 and range trading seems like the most obvious outcome there.
More barriers are reported in AUD/JPY at 96.00 and bids are building 94.50/75. Flows have been reasonably light in AUD/USD but sell orders are reported .9725/50 and real-money funds are still reported on dips starting at .9630.
It looks like a day of range trading is likely, roughly between .9630/.9730. The short-term bullish trend is strong but heavy technical resistance levels are likely to slow it down a lot.
Sell AUD/USD on a failure at .9725, looking to buy back near .9645 and keeping stops tight above .9755. Or, buy EUR/JPY dips towards 134.75 with stops below 134.25 looking for a test of 136.00 later today.
