Matt Simpson, CFTe, MSTA
CityIndex
Another nail in the A$ coffin. With lighter volumes and a rush to the exit from A$ bulls we seem on tracks for fresh annual lows.
Retail sales fell flat on its face, up only 0.1% and much below the 0.4% expected. AUDUSD was quick to react with an intraday 9-month low and returning to the bearish trend it has been stuck in for 4 weeks since the 94c high. Traders will now focus on Trade Balance and Building approvals tomorrow where any further signs of weakness should see AUDUSD test 0.8865, the annual lows. It will then be over the US for Nonfarm payroll data. A strong employment figure from the US could see the A$ close the week to an annual low. Taking into account the bearish momentum and poor domestic data I expect to see Traders shift back to Net Short positions for the 1st time since April.
We could well reach 0.886 today but I would expect some profit taking here at least and a rebound. Other charts suggest there is room for a cycle low on A$ across the board but we may need to wait for the close of the week to better decide that potential, as US data will then dictate.
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