And welcome to another week in the thunder dome. A relatively quiet close the previous week was a welcome change to the tumultuous nature of the market and price action in the days preceding it. Headlines attempted to rule the roost over the weekend and all were coming mainly out of the beleaguered Eurozone. With Italy passing fresh austerity measures and various odds and ends of jawboning out of senior Euro officials the market reaction was muted into the Asian open last night. USD sales look like they may be the way forward for the first day or two of this week (as has been the case for the last few weeks) before there is a turnaround of fortune and the USD finds a fresh bid tone. I mentioned it last week and you will likely hear it again a few more times in the coming days/weeks, the fact that liquidity is at a premium in this market and not only will it continue to get thinner as the year draws to a close but so too will the price action which will become far more erratic and volatile as a direct result.
The calendar this week is dominated by central bank decisions and first cab off the rank is the Reserve Bank of Australia with the Bank of Canada and more to follow in days to come, not least of which the European Central Bank on Thursday. In both instances of the RBA and the ECB the market is widely pricing in a fresh round of rate cuts, but unlike in the EURUSD, I don’t think this is entirely priced in to the AUD/USD, which could create some opportunities in the next 24 hours.
The data calendar today is relatively light with the UK Services PMI, and US Non ISM Manufacturing being printed later.
With regard to the crosses, well it still remains tough to sort the wheat from the chaff and direction is equally difficult to identify. The following are what at the beginning of the week stand out to me as levels;
In the EUR/USD on the day, first port of call would be 1.3480 with stops heard to be sitting above the 1.3530/40 levels, but rallies here are likely to be faded by the market especially in light of failure to close the week above the important pivot. On the downside we’re looking for at least n hourly close below the 1.3330 level with more formidable support coming it at 1.3230 and 1.3180.
The AUD/USD is in a similar boat as the EUR/USD with failure last week above the 1.0330 level, there will be stops up there waiting to get triggered for those in the market short already. For choice there will be those out there looking to fade strength into 1.0280 and the downside remains open to further capitulation but will need to wait for the RBA decision and statement to follow.
In the USD/CAD, 1.0230 is the level for stops just above, but if you believe the USD story for the week then dips should be well supported with players looking to either re-establish or add to longs on dips into 1.0080 (held very well last week), should stops get taken out there more bids could come in at 1.0020/30.
And finally it’s worth taking a look at the EUR/AUD which is back to historical lows and while both individually look overdone in relative terms, there looks to be an opportunity for the AUD to fade more quickly than the EUR, which invariably means a higher EUR/AUD over the coming days. The obvious level is 1.3000/1.2950 and upside targets on rebounds are 1.3290 and 1.3430.
The calendar this week is dominated by central bank decisions and first cab off the rank is the Reserve Bank of Australia with the Bank of Canada and more to follow in days to come, not least of which the European Central Bank on Thursday. In both instances of the RBA and the ECB the market is widely pricing in a fresh round of rate cuts, but unlike in the EURUSD, I don’t think this is entirely priced in to the AUD/USD, which could create some opportunities in the next 24 hours.
The data calendar today is relatively light with the UK Services PMI, and US Non ISM Manufacturing being printed later.
With regard to the crosses, well it still remains tough to sort the wheat from the chaff and direction is equally difficult to identify. The following are what at the beginning of the week stand out to me as levels;
In the EUR/USD on the day, first port of call would be 1.3480 with stops heard to be sitting above the 1.3530/40 levels, but rallies here are likely to be faded by the market especially in light of failure to close the week above the important pivot. On the downside we’re looking for at least n hourly close below the 1.3330 level with more formidable support coming it at 1.3230 and 1.3180.
The AUD/USD is in a similar boat as the EUR/USD with failure last week above the 1.0330 level, there will be stops up there waiting to get triggered for those in the market short already. For choice there will be those out there looking to fade strength into 1.0280 and the downside remains open to further capitulation but will need to wait for the RBA decision and statement to follow.
In the USD/CAD, 1.0230 is the level for stops just above, but if you believe the USD story for the week then dips should be well supported with players looking to either re-establish or add to longs on dips into 1.0080 (held very well last week), should stops get taken out there more bids could come in at 1.0020/30.
And finally it’s worth taking a look at the EUR/AUD which is back to historical lows and while both individually look overdone in relative terms, there looks to be an opportunity for the AUD to fade more quickly than the EUR, which invariably means a higher EUR/AUD over the coming days. The obvious level is 1.3000/1.2950 and upside targets on rebounds are 1.3290 and 1.3430.