AUD/USD drifted off during the Asia afternoon as the bulls looked to reduce positions ahead of the US FOMC release on a possible QE3. The drive took the price back to 1.0430 and looked likely to continue but for a small but tough line of speculative buying. A lacklustre European session gave way to the release of the start of QE3 during the US session with markets jumping all over the place before grinding higher on the strong move in the equity markets. AUD jumped from 1.0450 to a high of 1.0565 before settling quickly at 1.0545. We have turned neutral in our short end bias as the waiting for the good news on QE3 is over and with it not coming in as strong as what the markets were expecting and the much stronger concerns over the ditch in Europe. We don’t see a strong rally towards 1.10 happening at the present time. A focus shift back towards European concerns should see the commodity markets again come under pressure. For today a move back towards 1.0500 maybe 1.0450 on the wide is possible.
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