Currency Updates:
The Australian Dollar (AUD): The pair did not manage to bounce back much after the CPI drop. Bears are encouraged by the Aus forward short rates, which continued to grind lower despite the recent concern about inflation. However, investors should also take into account the fact RBA did say to keep rates steady for awhile therefore, next RBA meeting should bring a lot of attention on whether Governor Steven will act on this poor CPI data.
The AUD: With current short term high being set (0.9460) and a disappointing CPI data, bears could use this opportunity to try and push the pair lower. Current pivot point at 0.9250 and resistances comes in at 0.9315 and 0.9350.
EUR/USD: A relatively better than f/c EZ PMIs, the rally for the pair began to a high of 1.3855. However, the pair was unable to break the resistance of 1.3860-65 regions and slid back to 1.3840 as NY opened. NY session continued to pressure the pair to technical support in the 1.3820/25 zone. The 200 hour MA and the 50% Fib of 1.3785-1.3855 sat in that zone and were tested just before the US housing data was released. ECB Nowotny stated that it wouldn’t rule out QE program to buy sovereign bonds but the time for QE action shouldn’t be taken before June. Market now awaits for ECB Draghi’s statement.
USD/JPY: The pair was under pressure due to weaker stock prices. The 200 HMA 102.15-20 held after many attempts to try and break through it. Market seems to be well bid until Friday Tokyo CPI releases which will give market a better idea as to where the BOJ stands. The Kijun line at 102.70 has served as ceiling all week and remains important resistance.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Foreign Bond Investment w/e 115.5b-prev
• 23:50 JP Foreign Invest JP Stock w/e -83.5b-prev
• 21:00 NZ Cen Bank Interest Rate N/A f/c 3.00%, 2.75%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
