AUDUSD - rejects 1.04 again
Have you ever been up a ladder and maybe gone one or two rungs too far? You get a very uncomfortable feeling and sometimes you can fall - seems like 1.04 is one or two rungs too far for the Aussie dollar at the moment. Sure it hasn't crashed but each time for the last few weeks it has got over this level it has been chased back or simply lost support up there.
I have taken the Fibonacci levels off the chart above because it was too messy but the blue box represents a congestion zone and then of course we have a number of trendlines that are also converging in this space. For the moment the AUD remains well supported but it still can't make sustained headway.
No doubt some of that has to do with equities marginal but volatile performance overnight or it could simply be that there are no fresh catalysts to push the AUD significantly higher or lower at the moment. I'll go with this as my explanation, nothing exciting going on.
There was a little bit of excitement in the local press yesterday however as the rumour that the Australian dollar was going to be upgraded to the Pantheon of the Global FX Gods with the IMF about to bestow "Reserve" status on it.
I have written a piece on my view on this at GlobalFX on the Aussie's reserve status and what it means but the key is that any IMF move simply reflects the reality of what has already happened.
EURAUD - stronger as EUR pushes higher
While I am still targeting lower levels on EURAUD I have to admit that for the moment I am more Feather Duster than Rooster as the AUD's weakness and the EUR's strength see this paiur head in the opposite direction.I guess if the European political class can get its act together and stump up a pile of cash for Greece then this will help the sentiment and situation but I'd also add that structural the dinner conversation is likely to shift from Pork to Fish. Of course you know I'm referring to the PIIGS but increasingly and after yesteerday's France downgrade by Moody's focus is going to turn to France, Italy, Spain and Holland - Fish.
Each of these nations is in real economic strife and will continue to weigh on the Euro and don't forget Germany is slowing materially as well. The Big man of Europe is catching cold.
Closer to hand though I won't be playing unless this pair trades up through 1.24 or down through 1.2247.
AUDJPY - still pushing higher
I read this morning that every one hates the Yen and its the trade that a number of hedge funds have on. This article was written as if to say that because lots of people think the Yen is going to weaken then perhaps its worth taking the other side of that coin.That is reasonable if this truly is a crowded trade but it doesn't feel like one yet - not overly crowded anyway. CFTC Commitment of traders reporting is a week old now but while it shows positioning in the top half of Yen shorts its not at extreme levels.
Looking directly at AUDJPY as you can see in the weekly chart above the break out has only just begun and i am targeting a test toward the downtrend line around 87.70 over the next couple of month's.
AUDNZD - found support
Even though AUDNZD found support yesterday just above the level I said would signal a break lower (low of 1.2691 versus 1.2689) the daily candles suggest a retest toward that level will ocurr again. On the day though we are probably looking at a 1.2690 - 1.2650 range.
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