USD Trading Outlook
The Thanksgiving holiday has ensured a fairly quiet overnight session with the AUD/USD trading in a quiet range. End-of-month flows will be the main factor in today’s trading session and all reports that I’ve read expect these flows to be AUD/USD positive. Nevertheless, the big real-money funds have been very regular sellers of AUD against all of the other majors and we must wait and see whether this continues or not.
There were more woes for the beleaguered AUD overnight and it suffered more heavy losses especially against the GBP. We are seeing some very big real-money funds continue to adjust their weightings and further moves in the crosses will only lead to more selling. Option players have also been to the fore and this is the way trends develop in the FX market, when selling begets more selling. It’s Thanksgiving today in the US, traditionally a quiet day on all global markets. Japanese retail trade is the only economic data of note.
The consolidation phase for the AUD lasted all of 4 sessions and the failure to break back above .9200 led to another strong sell-off in AUD/USD. The impulsive nature of these moves lower suggests that there is more downside to come for the AUD and the fact that the selling is coming against all of the other majors should be telling the AUD bulls to take a long break. There is nothing much on this morning’s economic calendar apart from the NZ trade data.
The AUD had a day of consolidation yesterday, although it will close below 1.1190 against the NZD which is definitely a bearish indicator. There isn’t much on the economic calendar apart from BOJ monetary policy minutes but watch out for headlines on the newswires this morning from the RBA deputy Governor who is giving a speech at 9:15 AEDT. He will indulge in a bit of verbal intervention no doubt.
I totally misjudged the strength of the AUD sell-off on the crosses and technical support levels in AUD/USD were unable to hold. There is no point in getting in the way of this sort of momentum and the AUD looks set for further losses, especially against the GBP. The economic calendar is pretty bare until RBA deputy governor Lowe speaks later today. Verbal intervention has been very effective for the RBA in recent weeks so we can expect more of the same today.
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