AUDUSD: Fail Break

The Aussie tried to break higher yesterday after the news of the Greek deal broke in Asian trade making a marginal new high for this run at 1.0489 before reversing when the US dollar reasserted itself in North American trade.

I thought the Aussie might have gone on with it yesterday but it is clear for the moment that how ever strong the support is at the bottom of the range Aussie bulls seem to be trading as if they need confirmation from other markets in the very short term time horizons.

I guess that makes sense at this time of year and with the US fiscal cliff looming and the potential problems that is going to cause markets and the economy if a resolution can not be reached. On this front it was interesting that Harry Reid’s naturally partisan comments around 2.30 pm New York time knock the S&P lower when it had been roughly unchanged up to this point.

So the Aussie tried and failed to break higher and has now turned lower once again inside the range. The outlook will now really be tied to overall market sentiment and while the relationship and correlation with equities is not as strong as it has and can be at the moment the reality is that besides the Agricultural commodities most markets are trading with or as a residual of the US dollar and equity moves.

It is going to be a tough time for traders.

EURAUD – trendline still

Euro turned lower with the US strength overnight which while it was to my mind about the fiscal cliff and the equity market could equally be sourced in the continuation of better than expected data from the US overnight. As I highlighted in the GlobalFX Morning Call the Citibank Economic Surprise Index for the US continues to be in strongly positive territory reflecting the fact that the economic recovery is presently stronger than the pundits are currently forecast which is an additional positive for the USD vis a vis the EUR.

So even as the AUD pulled back from its own high so too the EUR retreated from 1.3009 overnight which meant that EURAUD was once again unable to push through the down trend line. But it is walking out sideways from under the trendline which, while it isn’t the strongest signal does open up some further topside for EURAUD

AUDJPY – Retreating from highs

This one certainly looks like a tradeable high with an obvious stop is in place. It will be interesting to see if Global FX markets pick up on the OECD report overnight which encourages the BoJ toward further monetary stimulus. It probably doesn’t matter because Abe has well and truly stolen the OECD’s thunder on this matter but time will tell.

For the AUDJPY as you can see in the chart above it has a clear top now and the MACD is starting to very gradually revert back toward 0. This is one of the ways I use this indicator as a directional input for the spot price – it is not fool proof but it suggests to me further retracement of the strong rally in AUDJPY is in the offing.

A break of 85.50 would be a signal for a deeper retracement.


AUDNZD – sideways

This one is ever so boring at the moment with a lack of decent data in either nation to drive the cross and moves up and down being roughly mirrored so far in the past couple of days.

The ATR is contracting at the moment for the AUDNZD which is reflective of the recent consolidation and I prefer to play in other pairs at the moment.

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