AUDUSD - Aussie slammed with stocks
It was a weird 24 hours really wasn't it. The election day zone in time rally in the US never really felt like it had any grounding and the tractor beam it exerted on the USD, Euro, Oil and the Aussie dollar felt like a trap. Yesterday the AUD had been constrained by the Fibonacci resistance at 1.0442/4 but then after the election the AUD rallied to a high of 1.0480 where I've heard from the market that Australian importers were all over it selling.Indeed it's been a bit of an ugly week so far with a rally off the lows in the 1.0330's to last nights high at 1.0480 and then pullback back under 1.04 to the low of 1.0395 this morning at the low point of the US equity market sell off. Today we get the Australian employment data which is always an interesting and important number for the Aussie and for expectations about what the RBA is going to be doing with interest rates. The market is looking for a 5.5% unemployment rate but it is the employment change which is the key.
Just for the record I never trade the lead up to this number, or any employment numbers actually, they are simply too volatile, but the period after the number can always be a bit volatile and fun - but only as long as you know exactly what the market was looking for in the number.
Anyway the AUD had an ugly reversal of fortune but is really just trading in a big old range - whatever happens as long as Equities don't tank completely the AUD might slide a little toward very solid support in the 0.9970-1.0150 region eventually but support is expected to remain solid. Closer to hand longs instituted on the break of 1.0420 now have a stop at 1.0340 - small posi though.
EURAUD - still heading lower
The Euro was hit last night both by the European Commission's downgrading of the growth profile both for 2012 and the following two years. At the same time Euro was also under pressure from the realisation amongst traders and the politico class that Germany is getting dragged into the mire - I'd argue that it is well in the mire already. So Euro was poll-axed falling from a high of 1.2876 to a low right on fibonacci support at 1.2734.
The relative outperformance of the AUD over night thus saw EURAUD fall further but it is off its lows for the moment. This cross is accelerating to the downside and I am targeting 1.20/1.21 in time.
AUDJPY - False break as Yen gets a safe haven bid
Ouch, yuk - look at that candle. Is that a bearish engulfing pattern?
This one looks like it has topped for now and probably won't turn given the dynamics of the USDJPY and the Yen safe haven bid unless or until stocks turn around. The S&P 500's close below 1400 is a big sign that a move toward 1350 is on the cards and that means USDJPY lower and with it AUDJPY.
AUDNZD - watch the employment data spread
Today we get employment data for both new Zealand and Australia and this is a good proxy for the medium term outlook for the AUDNZD - so we will be watching it closely.
In terms of price action the question is was the recent pullback it for the AUDNZD or is there further downside to come? i confess to not really having a good feel for it so i will retreat to my bigger time frames. I think it is headed toward 1.2800/50 and I want to buy it with a 1.23 handle on it. If you want to trade this intra-day, which i NEVER do, watch the trend line at 1.2784.
You can find me on twitter @gregorymckenna or @FX_Global where I am happy to answer any questions about this post or anything else to do with the AUD or FX