AUDUSD - defying gravity and the fiscal cliffThe Australian dollar was the residual beneficiary of the better news out of China on exports and trade data over the weekend in the first 24 hours of trade this week. While most currencies are either flat or a little weaker against the US dollar the Aussie is up 0.41% to 1.0428 after hitting a high overnight of 1.0442 which was the 61.8% level of the September October selloff and the level through which the Aussie had a false break last week.
It's an interesting time for the Aussie as it out points many currencies as it remains the beneficiary of safe harbour flows. Last week's unemployment data was good and whether or not the Australian government can or can"t deliver a surplus in 2012/13 while it might be a big thing for the local press and politically it just doesn't matter to global investors. Or indeed the ratings agencies with Moodys Investor Services saying yesterday that the downturn in mining is no threat to Australia's credit rating.
"It's inevitable when you have a boom, such as you have had in mining and liquefied natural gas, that you are going to see a period after that where it cools down a bit," said Steven Hess, Moody's lead sovereign analyst for Australia, in an interview.
"It's inevitable, but that doesn't mean it's a problem."
So the coverted AAA rating plus relative high rates plus a still solid fiscal position means the AUD remains the least ugly currency out there at the moment.
But as you can see in the chart above it is a very messy outlook on the dailies - trendless but certainly not friendless for the Aussie at the moment. Whether you look at the 4 hour, daily, weekly or monthly charts the AUD is stuck and volatility is low - it might be time to buy some vol and just wait and see what happens on this one. I always think that I might as well at times like these because the cost of the option is really a better bet than the stops that would likely be triggered on positions given the lack of trend.
EURAUD - lower still
The EURAUD could not be more different than the AUDUSD. At present there are 4 currencies on the planet that people want to buy. Yen, Swissie, US dollar and Aussie. You can't buy Swissie so that leaves the other 3 and you can see this in the fact that against each other these 3 are trendless on a daily time frame but there have been some really good trends either in place or emerging against other currencies.
EURAUD is a case in point - as you can see in the chart above it has been in a down trend for some time now and our systems have been short for 9 or 10 days. With EURUSD looking like it is going to accelerate to the downside soon we still favour this one lower and would use any bounce to sell into if not already short.
AUDJPY - a conundrum wrapped up in a paradox
If their is an FX pair that should be much higher fundamentally it is this one. Just think about the differences in the level of economic growth - Japan printed a negative 3.5% annualised rate of GDP growth in data released yesterday which compares terribly with Australia's expected 2.75% or something like that in prospect. Then of course we have fiscal positions, debt levels, demographics and the decline of Japanese industry.
Yuk - it seems to me over coming quarters USDJPY is heading back to 100 and with it AUDJPY close behind.
Looking closer at hand however you can see where the AUDJPY did find some support last week from the old downtrend line but it is hard to get bullish on this cross unless or until USDJPY breaks higher.
AUDNZD - Rally hits resistance at 200 day ma
The AUDNZD has for the third day in a row hit resistance at the 200 day moving average which sits at 1.2782 today. Longer term I am firmly of the belief that this pair is headed sharply higher but for the moment it looks like AUDNZD needs either a time or price consolidation before it moves higher once again.
Perhaps a move back to the recent break out level at 1.2650ish to see how support looks there.
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