Preferred Strategy: The Aud has had a solid session, underpinned by higher base metal prices, although it remains well within its recent range below 0.7700 and would appear to have more of the same ahead of it unless the China CPI springs any major surprise.
While the short term momentum indicators look mildly supportive for a possible squeeze up towards 0.7700+, the longer term charts still look heavy and a break of 0.7625 would bring fresh selling, which could then see a run towards 0.7600 and eventually to 0.7570. Direction today will come from the Home Loans and China CPI although there is little out apart from that and it may be another day of consolidation within the 0.7625/7700 area.
Overall, with the longer term charts looking heavy, I suspect the Aud$ is building a bear flag and is biding its time ahead of a more sustained test of 0.7625/30, which could then take us to 0.7570 and eventually towards 0.7400, but patience will be required and we look likely to see better levels to sell it than we are currently trading at.
Note that the Kiwi is squeezing higher following the RBNZ Meeting and could drag the Aud$ with it.
Economic data highlights will include:
Investment Lending for Homes, Home Loans, China CPI, PPI
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