USD Trading Outlook
AUD/USD Europe ha the pair hug the 0.8970 area for the most part in their morning as the mkt continued to digest the movement post-FOMC. NY walked in with the pair near 0.8975 and it looked set to consolidate further. Bear took control early on though as jobless claims came in much lower than f/c and the mkt grabbed hold of that data & ignored the poor housing data. US yields rallied and took the USD with them. AUD/USD dived lower & set a new trend low of 0.8927. The losses were quickly reversed though. US yields gave up some ground the the 2yr stalled short of 0.60% and the 10yr held below the 200-DMA again. AUD/USD steadily ascended from he low, took out Europe's high and hit 0.8997. Some late day USD strength had the pair slip from the high and sit just beneath 0.8980 towards the close. The risk of a s-t squeeze exists. Daily RSI diverged on the new low and a long lower wick forms on today's candle while yield spreads have widened. While the longer-term trend remains bearish, a retracement of the recent fall may be due.
AUD/USD elicited fresh support at 0.9061 (Asia low) on two occasions during the Ldn am (to date), with 0.9078 marking the interim high. More bids are tipped at 0.9050 (Mon high & small option expiry level) and 0.9030 (Sept 12 low). There is a very large 0.9100 option expiry for today’s 10am ET NY cut (0.9113 was yesterday’s short covering-fuelled high).
AUD/USD Early Europe saw the pair ignore the China data and rally off the 61.8 Fib of 0.8660-0.9505. The lift was aided by EUR/AUD's fall from above 1.4715 towards 1.4300. As NY got going AUD/USD sat near 0.9015 and the lift persisted. More sales in EUR/AUD down towards 1.4295, this time by a US hedge fund, pushed AUD/USD up above 0.9030. Broad based USD weakness after the miss on US IP data combined with a US bank's well know tech team cutting their AUD/USD short rec to push AUD/USD above Friday's close and to a high of 0.9050. A recovery for the USD saw a dip below 0.9020 but late in the day the pair settled near 0.9035 to leave it virtually unchanged on the day. Asia now has RBA Assistant Gov. Kent's speech and the RBA minutes to contend with. Both events are likely to mention AUD strength but may have only limited impact. The market is waiting on the Fed to see if they lean hawkish on Wednesday. The mkt seems to have built in somewhat hawkish expectations so if Yellen doesn't deliver, AUD/USD shorts may get a nasty squeeze. Tests of res near 0.9110 and the 200-DMA may then be in order.
AUD/USD The market is still in sell rallies mode as Europe smashed a rally from near 0.9050 to 0.9080 early in their session. the sales pushed the pair just below 0.9045 before a slight bounce saw the pair just above 0.9060 into NY's open. A minor blip up in early NY met sellers after prior US retail sales data were revised up. The revisions sent US yields and the USD higher. AUD/USD slipped to a new trend low of 0.9030. some USD longs taking profit into Europe's close saw a lift towards 0.9055 but the pair slid again and sat near 0.9045 late in the day. Bears appear fully in control as the pair sees multiple daily closes below the 200-DMA and closes the week below the 50% Fib of 0.8660-0.9505. Day/week RSIs still give bearish momentum. Although they are o/s there is no divergence. Bears now have their sights on 0.8986/95 (daily lows mid-March) and then the March low at 0.8891. Risks for AUD next week are the RBA minutes Tuesday and the RBA Bulletin and annual report on Thursday. It's likely those events we again note AUD being too high.
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