USD Trading Outlook
Emerging markets finally settled down last night but not before the Indian Rupee and the Turkish Lira made new lows against the USD. The AUD/USD managed also to stabilise around the .9000 mark, mainly due to heavy AUD/JPY buying by Japanese retail players. If the panic selling in EMs calms down, then we should see the AUD/USD start to recover some lost ground. If the taper-inspired flight out of EMs continues, then the AUD/USD will soon be testing .8850. Traders will be watching the newswires carefully for any comments from the Jackson Hole Symposium but with most of the big central bank leaders missing, it’s unlikely to be too controversial.
The AUD bulls were driven back by heavy selling in AUD/USD near .9230 and in EUR/AUD near 1.4450. I’m still strongly of the opinion that we are in a consolidation phase for the AUD against most of the other majors and this will remain until the general election. Today’s main risk event will be the RBA minutes from the last meeting. I’d expect most of the action to be in the crosses once again and we can look to metals and equity markets for leads.
It’s been a quiet start to the trading week with the AUD/USD sitting quietly near .9185. There are opposing factors at play in the AUD market; rising US yields and falling global equity markets are AUD-negative but sharp rises in metals markets and a steadying of Chinese economic data are AUD-positive signals. The fact remains that the AUD market is still very short and unless some very bad news happens prior to the general election we are likely to see this period of .90/.93 consolidation continue with definite top-side risk. There is nothing of note on today’s economic calendar.
The AUD has started to unwind some of its over-sold technical and positional tendencies. There have been some decent gains made against all of the other majors but with resistance levels looming against the USD. JPY and EUR, the easy short-term money has probably been already made. Overall I like the idea of being long AUD/USD but we could easily see a re-test of levels near .9000 before more topside develops. Not much on today’s economic calendar so it will again be all about positioning.
Go to U.S. Dollar (USD) Archive