Australian Dollar Morning Report - AUDJPY breaks up EURAUD points lower

AUDUSD - still biased higher

The AUD is getting closer to walking out through the top of the long term down trend line it has been constrained by since the high back in 20111 around 1.1080. 

Australian Dollar weekly outlook

It is interesting to look at this chart and then to think about what it means - in many ways the impact of the sovereign aand central bank buying over the past a8 months in particular has dampened downside volatility at a time in global markets and the economy when the Aussie might usually have been expected to head into the mid 90 cents region. 

Equally however the lack of top-side volatility with all of the buying that has occurred is equally remarkable. A strong fundamental case could be made that the AUD should be closer to if not exceeding its highs of 2011. 

It seems that the new buyers have dampened volatility in both regions because in not allowing the AUD to fall too far or too hard over the past year or so so too then the positioning is not getting to skewed for blow offs topside. 

Having said that though check out our speculative wrap up of CFTC positioning which shows that AUD longs are at their highest in more than 12 months. 

EURAUD - more downside to come

The Euro crisis is the gift that just keeps giving. Sure Greece looks to have pulled off close to the entire amount of the €30 billion in debt it wanted to buy back in the past week but the re-emergence of Silvio Berlusconi in Italy and the downgrade by the Bundesbank to the economic outloook for Europe's biggest economy just highlights the mess that Europe remains in. 

I saw an article that highlighted my underlying belief about Europe over the weekend and so I am prompted to reiterate the fact that while the dissolution of the Euro project seems to have been semi-permanently forestalled by the can kicking of the ECB and European politico class the relaity of the economic catastrophe that is still occurring remains a hand brake on economic growth for some years to come. 

Unless or until we start to see unemployment come down across the region the crisis and austerity will remain. 

So fundamnetally I remain an unreconstructed Euro bear. I still can see why its worth more than 1 US dollar so I expect the low of 1.2878 in EURUSD from Friday night to be easily exceeded in coming weeks and months - the obvious caveat is the US Fiscal cliff but for mine Euro is biased back into the low to mid 1.26 region at a minimum. 

Euro Aussie fall

Which means that EURAUD remains under pressure and headed back toward the recent low in the mid 1.21's. 

AUDJPY - breaking higher

The AUDJPY is breaking higher on the daily charts but I have put the AUDJPY weekly chart below to show that like the AUDUSD there is significant overhead resistance at 87.36 which was our target from some time ago. 

Aussie Yen

If the AUDJPY can break through 87.36 then the the early 2012 high of 88.60 comes into focus. 

AUDNZD - Still pointed lower

AUDNZD has spent the last two days doing not terribly much as the two antipodean currencies move together for the moment. Business conditions and consumer sentiment out in Australia this week might give some catalysts for movement but overall this pair simply looks biased toward the 1.2525ish region in search of support. 

Aussie Kiwi

Greg McKenna

Catch me on Twitter @gregorymckenna or @FX_Global

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.