USD Trading Outlook
It’s been another very quiet 24 hours in the FX market. The Yen fell on more stimulus talk and the GBP had some brief volatility around the UK GDP data but otherwise it’s been very quiet. The AUD/USD continues to stall just above the previous resistance levels between .9315/50 and this level is again looking pivotal. End-of-month flows tend to favour the USD across the board and with Friday usually a ‘risk-off’ day, we could see some downside pressure on the AUD/USD.
The NZD was the main mover over the last 24 hours, giving up quite a lot of ground against most of the other major currencies and this in turn has had an effect on the AUD, which has also slipped on the crosses. The economic calendar is totally empty so we cannot expect to get any volatility from there.
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.
The USD has started the week on a weak note after Larry Summers withdrew from the race for the Fed chairmanship. AUD/USD has jumped back above .9300 in thin early-Asian markets and we are again eyeing important technical resistance at .9350. There is nothing of note on today’s economic calendar so we will look to flows and orders to drive volatility.
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