AUDUSD - ready to break out?
The Aussie dollar had a very quiet days trade I guess that was true of most of the majors except maybe for GBPCAD which spiked on the announcement that BoC Governor Mark Carney would be taking over from Mervyn King as Bank of England Governor.But while it might have been quiet the Aussie's day was constructive insofar as that it continued with a slightly higher bias even though stocks were a little lower.
With the downside having been so well supported over the past few weeks and with some of the key drivers of the Aussie like gold and other commodity prices plus interest rate differentials having improved in the Aussie's favour the pressure looks to be building for a topside break of the range.
You can see in the chart above that if the Aussie can trade through the recent high at 1.0480, plus a few points extra to see if its a real break, it could run to the downtrend resistance at 1.0545/50. We never pre-empt trendlines but this one is a big one and if it gets there we'll see how it looks then.
Overall the Aussie has little domestic catalysts to drive it so it is offshore market moves and data that are the key this week.
EURAUD - still constrained by trendline resistance
With the Aussie doing okay and the Euro off a little over the last 24 hours the EURAUD fell a little and it remains constrained by the down trend line you can see in the chart below.
It is an interesting time for the Euro at the moment with enduring headwinds but equally potential positives close at at hand. If EUR can get through 1.30 it can run for another big figure which could drive EURAUD higher as well but for the moment this cross needs a fresh external catalyst.
AUDJPY - perhaps now a top is in place
I'm not beating myself up for being silly last week and not following my protocols - that happens sometimes and the key is to have stops and make sure its a small lesson. Last night's price action is more suggestive that a top may have be forming - I don't think it is exactly the swing high of the USDJPY that is apparent but it is a developing pattern worth watching for a short term reversal.
Having said that of course this is complicated by the fact that the AUDUSD is trying to break higher which would naturally bias the AUDJPY higher all other things equal.
So for the longs its time to drag the stops up to market and if you are a contrarian and want to go short it is small posi's with an obvious stop off last night's candle.
AUDNZD - moving with stocks
As we discussed yesterday the NZD is moving in line with stock market performance than is the AUD so with NZDUSD a little lower and AUDUSD doing okay AUDNZD has naturally moved back up again.
On the day there is probably more topside than downside bias here perhaps back up toward 1.2750/60 which is a very different outlook to my thoughts that AUDNZD would head down toward 1.2600.
This cross' drivers appear to be external to it at the moment so I prefer not to play it short term.
Greg McKenna
Catch me on twitter @gregorymckenna or @FX_Global
