USD Trading Outlook
AUD/USD Europe didn't allow AUD/USD longs to come up for air after the miserable OZ trade data. What little lifts of Asia's 0.9450 low were capped near 0.9465. NY walked in with the pair just below that level ahead of ADP. The big beat for ADP sent US yield higher. AU-US yield spreads widened and the USD went bid across the board. AUD/USD dived, ran stops through 0.9440/45 and hit a 0.9429 low. Pressure remained on the pair as AUD/NZD traded down to 1.0765 and GBP/AUD buying went through the market. Late in the day the pair sat near 0.9440. Recent longs are getting anxious as it looks like the 0.9500 break on July 1 may have been false. They will focus on RBA Chief Stevens' speech in Hobart later, the ECB meeting and the US jobs report for their cues. Should the stars align and AUD get weighed upon, AUD/USD may see a quick move to key support in the 0.9320 area.
TheAUD/USD eased by 31 points to trade at 0.9465 after this morning’s trade data release. The Australian dollar fell against the other major currencies in early Asian deals on Wednesday, as nation’s trade deficit widened more-than-forecast in May. Australia’s international trade balance has blown out to $1.9 billion due to plunging iron ore prices. The deficit was $1.9 billion in May, compared to a $780 million deficit in April, Australian Bureau of Statistics figures show. ANZ economist Dylan Eades said exports appeared to have driven the sharp widening in the trade deficit.
The pair has rebounded above its support and has validated a bullish flag. Further advance is therefore expected as the pair stands above its moving averages and the daily RSI is well directed above its neutrality area. Then, as long as 0.9120 holds as a support (previous resistance which now acts as a support), next up targets are set at 0.9540 (horizontal resistance) and 0.9760 in extension (October 2013 top). A third target is set at 0.9970 (horizontal resistance). Only a break below 0.9120 will turn the outlook to bearish with a first alternative target is set at 0.89 (horizontal support), and 0.8650 in extension (January bottom).
AUD/USD The sideways trade in AUDUSD continued as global rates receded further in the wake of the miss in Japanese Household Spending pushed JGB yields to one-year lows. The AUD and other carry currencies remain locked between the benefits of lower rates, yet still wary that equity markets may be topping out. AUD bears seem willing to continue leaning against the April 10 highs at .9460 ahead of next Tuesday's RBA. Carry strategies continue to win out by default as vol stays low and ranges across asset classes are constrained in typical summertime trading.
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