AUD: Should be busy today with plenty of conflicting forces at play

  • Risk aversion is quite heavy across all financial markets with big hedge funds dumping positions across multiple asset classes (see yesterday’s post). This is generally AUD bearish.
  • The big EUR/AUD buy order looks to be complete, this should ease the downside pressure on the Aussie.
  • Today’s unemployment data will add to volatility, 5.6% unemployment rate expected after 5.5% last time.
  • AUD/NZD is trying to return to its downtrend, another bearish sign overall for the AUD.
  • There is major support at 90.00 in AUD/JPY, which is the 50% retracement of 74.50/105.50 up-move.

As you can see, there are plenty of conflicting forces at play which should guarantee us volatility and a range-trading bias. I’m looking to play .9325/.9560 in the AUD/USD.

  1. Sean, thanks for your insight …

    quick question, these large orders … are they spread out over a given time frame to maximize the effect on the market? or what would be the reason to stretch out an order over a week?

  2. Hi Mike, the really big ones are normally stretched out over a few weeks so as not to panic the market. Say you have 20 billion GBP/CHF to buy, then you would normally buy 5 to 7 billion over a few days, then sell some back to keep mkt guessing, then buy some more etc. Could take 3 weeks and plenty of strong nerves. Don’t think that happened oin this occasion though, they just bought the lot as quick as poss, hence panic selling in AUD across board

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