Daily Outlook

AUD/USD finally broke through key support at 0.7500 overnight giving into USD strength as global bond markets sell off. The effect of falling bonds is to spike yields higher and this is especially negative for carry trades.

Carry trades are the high interest FX pairs such as AUD/USD long and EUR/AUD short and we are seeing the beginning of a unwind in this these pairs which have been stubbornly strong in the last few months as global volatility remained near record lows.

The spike in volatility and the fresh waves of risk aversion flowing through the market in the last week could be the start of a new trading normal and traders will be anxious to see whether the FED can calm the markets next week at the FOMC meeting.

The NZD/USD fell even more than the Aussie as the NZD has the highest interest rate of the major pairs at 2.0%. AUD/NZD was able to enjoy a small reprieve back above 1.0300.

AUD/USD 9/14/2016 12:51 AM  Trend daily chart (=)  Trend weekly chart (=) AUD/USD Intraday: under pressure. Pivot: 0.7540 Our preference: short positions below 0.7540 with targets @ 0.7400 & 0.7370 in extension. Alternative scenario: above 0.7540 look for further upside with 0.7570 & 0.7605 as targets. Comment: the RSI is bearish and calls for further downside. Supports and resistances: 0.7605 *** 0.7570 ** 0.7540 *** 0.7463 Last 0.7400 *** 0.7370 *** 0.7340 ***

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