USD Trading Outlook
AUD/USD The pair held to a tight range in NY's session as it consolidated beneath the 200-HMA in basically a 0.7780/0.7825 range. Early NY saw the pair dip to the lows on better than f/c weekly jobless claims. The slide faded into NY's afternoon and the pair rallied back near the 200-HMA as risk sentiment was upbeat. JPY weakness due to the risk rally pushed AUD/JPU above 91.90 and this dragged AUD/USD towards 0.7815. It sat near that level late in the session. Asia's session is likely to be subdued as the market awaits the US January jobs report. If the jobs report is soft AUD/USD likely spikes higher as shorts will cover. This will see the Feb and Jan 29 highs cleared. The door is then open to key resistance in the 0.8025/55 zone.
AUD/USD Europe negated an attempt to break the pair above the 200-HMA. Bears pushed the pair from the 0.7850 area towards 0.7805 as NY opened. Below f/c ADP data didn't deter bears. They persisted and pushed the pair lower early on. The slide accelerated a bit on the ISM non-MFG beat and subsequent lift for US yields and the USD. AUD/USD hit a NY low of 0.7743 but did manage a slight bounce. IT sat near 0.7765 late in the day as the USD saw broad based weakness late in the day. Traders now look to Oz Dec retail sales as their sole cue for trading AUD later. The m/m reading is expected at 0.40% vs. the prior 0.10%. An above f/c result might see the pair's recent rally get another boost. Weak results may see the pair make a trip to sub-0.7700 levels again.
AUD/USD With follow through on the break of 0.7700 limited in Europe shorts decided to cover a bit. The pair lifted off the new trend low & sat near 0.7680 as NY began trading. Early action saw the lift persist and it got an added boost on a bout of weak US econ data. The pair tested resistance in the 0.7710/20 zone. The zone held but the pullback was shallow. Broad based USD weakness (ignited by EUR/USD's lift) saw that zone broken and the short squeeze gathered pace. Pre-RBA levels near 0.7800/15 were only a speed bump for the rally. Upon breaking that zone the pair spiked to a 0.7855 high as shorts that sold post-RBA had to cover. As quick as the gains to the spike high were made, they were given back just as quickly as USD shorts covering took hold. The ensuing slide saw the pair just under 0.7790 late in the day. Recent shorts should have some concerns. RSIs are diverging on the new trend low, a long lower wick forms on the daily candle and the break below 0.7700 looks false. Bears need the 0.7890/10 (10-DMA, Jan 29 high) zone to hold. If it gives way key res near 0.8025/55 likely gets tested.
AUD/USD A tight range held for AUD/USD in Europe & NY trading. The pair consolidated recent losses as it held to a 0.7730/0.7798 range. The pair was unable to break out as it was buffeted by a falling AUD/JPY & EUR/AUD and rising AUD/NZD. Some doubts over the RBA cutting on Feb 3 also kept traders a bit reticent to move the pair. The Australian ran a piece quoting RBA watcher McCrann seemingly backpedaling on his early week call for the RBA to cut. This added to the pair's indecision and inability to make headway in either direction. Late in the day the pair sat closer to the upper end of the range as commodities and risk bounced. The pair may stay in limbo until Stevens make his decision. Should rates remain unchanged AUD/USD likely sees a knee-jerk reaction higher. However, if rates are unch and the tone of the statement is dovish the market likely interprets that as rate cuts are coming. AUD/USD should see a new leg lower and test the July 2009 low at 0.7700.
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