Currency Updates:
The big risk event surrounding taper-policy at the Federal Reserve is only 24 hours away and whilst the overall FX market has stagnated, the AUD continues to grind higher. This suggests to me that the market is short and nervous and we may be in danger of seeing some more short-covering spikes ahead of the FOMC. Today’s economic calendar is pretty light so it will be all about positional adjustment.
TECHNICALS: The close back above the pivotal .9350 level will be worrying for the bears and we can expect Japanese traders in particular to be paying attention to the bullish closes in both AUD/USD and AUD/JPY above their respective Ichimoku clouds. The obvious short-term levels to watch in AUD/USD are at .9280/.9390 (see chart).
CROSSES: AUD/JPY is testing important short-term resistance levels near 93.00 (see chart) and a break above there should see recent highs re-tested. The AUD has regained a bit of ground against both the GBP and the EUR but both pairs remain in short-term consolidation patterns. The AUD lost a bit of ground against the NZD over the last 24 hours and although momentum is lacking, the trend remains bearish.
ORDERS & FLOWS: Real money funds reportedly selling AUD/USD on the approach to .9400 and these volumes are usually significant.
INTRADAY CONCLUSION: Price action remains bullish in the AUD/USD, in my view, and I see any risk now ahead of the Fed as being to the topside. The macro market is short of AUD/USD and we must see if they can hold their nerve. Buy intraday dips to .9320/30 looking for a test of .9400.
TRADE OF THE DAY: This is a good day to stay defensive ahead of the FOMC. I see nice short-term technical resistance in USD/JPY near 99.40, so I favour selling there with a tight stop looking for a test of 98.50.
