The day ahead in the FX market, Thursday November 22nd

  • Could be fairly quiet today ahead of the US Thanksgiving holiday:
  • Yen weakness continues to accelerate with EUR/JPY 100 pips higher after breaking important technical resistance:
  • Economic calendar is again fairly bare for the Asian session with only the HSBC flash PMI for China to generate interest:
  • The EUR has recovered all of its losses from yesterday with EUR/JPY buying the main driver:
  • The AUD remains stuck in neutral, with reserve manager bids supporting but market happy to sell rallies ahead of an expected rate cut:
  • First main level to watch today is in EUR/JPY around 106.20, which is the weekly trend-line, 138 through 123. 
  1. Hi Sean,
    Many thanks for your constant info.
    The Aud seems to be under pressure alright, but i really cant see how a rate cut is expected:
    RBA “The effects of the earlier reductions in the cash rate were, meanwhile, continuing to work their way through the economy, and members expected that further effects of these changes were yet to be observed”
    “Members considered that further easing may be appropriate in the period ahead. However, at this meeting, with prices data for the September quarter slightly higher than expected and recent information on the world economy slightly more positive, the Board judged that the stance of monetary policy was appropriate for the time being.” basically the last paragraph of the minutes, having looked at aussie reports for november they are mostly above expectations, hence i do not see the reason for a rate cut in december, where usually retail sales would be high, at least part time employment will rise etc…
    also on the other hand if they dont aud would easilly rally to 1.06-1.07 till february when they are forced to do a rate cut just based on the high value of aud.
    i am kinda just sitting in the middle confused.

  2. Anas welcome to confused club. In my simplistic picture of the world: if RBA does not cut in Dec AUD/USD has potential to be north of 1.10 by Feb. So they’d better cut. Hence the expectation in my opinion.

    1. > ZenFx, I have a sinking feeling that you are spot on. It is against my religion to be long AUD, so i am waiting for 1.045 region to add to my short. I am a bit uneasy about all of this, because Sean was talking about 1.05 level a day or two back and trading in that range could be conductive for spike towards 1.06.

  3. ‘ Against your religion to be long AUD …’ 🙂 that’s very funny, in a masochistic sense. You really have to be a glutton for punishment trying to always short the teflon beach-ball! AUDUSD goes down very reluctantly and pops up very quickly.

  4. Kirill, can’t get the phrase ‘against my religion…’ out of my head 🙂
    You might have made a lot of money in the past 3 years if you had converted to a religion that only went long AUD! Just the interest alone would be enough!

  5. ZenFx, sorry for not clarifying. Against my religion is actually should be read more like against the odds. I have decided that on current environment and around 1.04-1.06 levels downside should be more pronounced than upside. Thus I am trading on the short side))) But it also tells that I prefer short side trading, it just my style. I know it is moronic, but it is hard to rewire myself.

  6. Morning Sean,

    This overnight was nice session for EUR/JPY. With this new high, EUR/USD follow up above 1.2850 as well. This backdrop is interesting, we have resistances for EUR/GBP at 0.8065, EUR/AUD at 1.2400, it’s seem a good configuration for sell rally ? but the timing is vital, i guess the key is EUR/JPY to said “go for short”.

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