AUDUSD - strong as an Ox
The Aussie Dollar is really as strong as an OX when you think about what is happening around the globe and with earnings and the outlook for the economy. Last night European equities were lower, the US stock market spent most of the day in the red and the early strength in the EUR and things like Crude Oil faded. Yet the AUD attacked the beach head that 1.04 has become hitting a high of 1.0399 before reversing to sit around 1.0375 as I write.
For certain the wall of selling at 1.04 and the sellers are winning for the moment but only just. I have no way of knowing whether a not touch or a knock out option is being protected above 1.04 or whether it is just fundamental selling. But in truth the very fact that the Aussie is at 1.0375 with every thing going on is of itself a victory for the AUD bulls. In the ugly contest that is global currencies the AUD remains both the King and Queen of the Prom.
Looking at the price action specifically we can see that the AUD broke but closed below the recent downtrend - what my son calls the roofline - which reinforces that line. But it is under pressure and a break of 1.0420 which is the recent high would signal a sharper move. I keep saying the AUD is range bound and it is off course until the range breaks. But if 20 gives way it could be a solid run higher. Support on the day 1.0350 and then 1.0325.
EURAUD - rally should fade eventually
The Euro's reversal of fortune after the weak unemployment data and the stock swoon was slighthly outperformed by the AUD so EURAUD fell a little. It remains the base case that this cross is going to head back toward the recent range lows around 1.2344 and there is nothing fundamentally or in the price action to disuade me from this view.
For all the concerns that we may have about the Australian economy going forward for Europe these are multiplied by many factors.
AUDJPY - just a big old range still
AUDJPY is stobbornly higher like the AUDUSD and my expectation that it might fall is not mirrored in the price action. So I have been wrong on that front. Because it is in a range though the trade is clear so a further rally is a selling opportunity with an obvious stop for the position for those who like to trade this way.
AUDNZD - Still consolidating
It is surely too early in the year for Ground hog day but that is the way it feels for this cross. Better than expected data from both countries yesterday pretty much cancelled each other out. I remain a bull on this one longer term so any weakness remains a buying opportunity.