AUD lower after Stevens comments
RBA Governor Stevens was reported on Bloomberg as saying that they were very close to lowering rates yesterday. Looks like next month is a done deal! AUD/USD dipped to 0.9120 on the reports. Best wait for confirmation before getting beared-up at the lows.
Cable outlook: Support holding, but barely
- Neckline of double-bottom at 1.5150 was breached but only marginally so (see chart).
- Lack of any bounce in recent times suggest more downside to come but I'm hanging on to my long position with a stop at 1.5100.
- EUR/GBP has again been capped below .8600 which will support the GBP.
EUR/USD: Sovereign bids reported nearby
- This level near 1.2970 is where the Sovereign bids have been reported in recent days.
- Selling interest was very heavy yesterday above 1.3075 and there is little technical support until 1.2870 (see chart).
- EUR/GBP remains capped below .8600, EUR/AUD selling was heavy at times but EUR/JPY closed above technical resistance at 130.45.
USD/JPY outlook: Break back above 100.00 has bulls in control again
- Technical close back above 100.00 argues for a full retracement to 103.75.
- Mild risk-off sentiment could weigh but market doesn't care, it wants to buy the greenback.
- AUD/JPY and EUR/JPY looking stronger by the day, more arguments for a higher USD/JPY.
- Next sell orders of note reported at 101.25.
AUD/USD outlook: Wednesday July 3rd
- Monday's lows at .9110 offer the first level of support with resistance now starting at the down-trend near .9200 (see chart).
- Australian trade and retail sales data today as well as China services PMI and a speech from the RBA Governor.
- The picture remains mixed on the crosses with AUD/JPY (see chart) and EUR/AUD giving the AUD some support but AUD/NZD still looking heavy.
- The return of heavy sellers near .9250 yesterday (same as Friday last) means that level is increasing in importance.
EUR/JPY: Tick. 131.30 next stop
There goes the first of the resistance levels, with EUR/JPY Fibo resistance at 130.45 getting taken out. Next resistance at 131.30 (see chart).
Levels to watch in early European trade
- USD/JPY: Technical resistance 99.90/100.
- EUR/JPY: Technical resistance 130.45.
- Cable: Technical support 1.5155/90.
- EUR/GBP: Technical resistance at .8600.
- AUD/USD: Bids reported .9130/35.
AUD/USD: Best left alone, wait for silly spikes either way
Pretty much as expected from the RBA and the AUD/USD is also doing as expected, edging lower towards .9200.
Time for coffee! Catch you at the European open.
What to expect after RBA decision
AUD/USD is currently trading near .9220 and the RBA is expected to leave rates on hold whilst maintaining its easing bias.
If this happens, I would expect the AUD/USD to edge a bit lower initially, maybe towards .9175/80 before recovering back above .9200.
Any change to the easing bias would likely see the AUD/USD rally above .9250 and movement from there will depend on where the stop-loss orders are situated.
Cable: Another downside try likely in early European trade
There is important technical support in the cable at 1.5155 (double-bottom neckline) and 1.5180 (61.8% 1.4830/1.5750) and of course EUR/GBP is also sitting just below important resistance. In other words, there are likely to be plenty of sell-stops in the GBP and I'd expect the London market to have a serious look at these once they get up and running.
I'm sticking with my long cable trade but will stop-out at 1.5100.
Indecision returns to the AUD
Plenty of opposing views surfacing this morning on the AUD with ANZ suggesting that we get a squeeze to .9450, whilst JP Morgan is suggesting that the move to .88/.89 is still intact.
Our interbank expert FXWW303 is suggesting that AUD/JPY should be toppy at 92.25, contrasting of course with Yours Truly who thinks that AUD/JPY is basing.
Usually indecision means range trading, when everyone gets stopped out!
EUR/GBP: Technical resistance still holding near .8590
These resistance levels .8590/.8600 have held surprisingly well in recent weeks (see chart).
EUR/JPY: Technical resistance at 130.45
The 61.8% retracement of the 133.80/125.00 fall comes in near 130.45 (see chart).
USD/JPY: Favour selling intraday near 99.90 with stops above 100.40
USD/JPY may indeed be headed for 120 like some would have us believe but that's too 'big picture' for intraday traders and risk-reward would definitely seem to favour the intraday bears. 100.00 of course is a big psychological level and was an interim high back in April (see chart). It is also the 61.8% retracement of the move from 103.75 to 93.80.
Cheap and cheerful trades are always a good idea in my opinion, and selling near 99.90 with a tight stop above 100.40 looking for 98.00 looks like a reasonable strategy.
RBA: What the major banks are saying
If you want the full lowdown from our hedge fund insider @FXWW888 (who made a great call on the AUD/USD yesterday at .9157!) then you will need to follow him on Twitter but here's the ultra-short version:
- HSBC: RBA to stay on hold, lower AUD doing it's work for them.
- BofAML: RBA to stay on hold, retain dovish bias, but AUD could still rise.
- WBC: Stay on hold, retain easing bias.
- CBA: Stay on hold, retain easing bias.
- NAB: Stay on hold, retain easing bias.
AUD/USD: .9280 looming as vital psychological level
The RBA will stay on hold today and given the conflicting global factors (rising US rates but a slow-down in China), I'd expect the subsequent statement to hold no surprises either.
- AUD/USD; we saw heavy buying last Friday near .9280 which the market soaked up and then collapsed by 160 pips. This level will be very important from a psychological perspective and if the bulls regain it then I would revert to dip-buying mode. Next solid technical resistance is at .9340.
- AUD/JPY looks to be forming a rounding base and with major technical support holding at 89.50, the immediate outlook here is starting to look bullish.
Looks like it's going to be a EUR/GBP dominated session
The one level I didn't mention below is of course the .8590/.8600 resistance in EUR/GBP and it looks as if the market might have its eyes on this, and likely stops just above. The cross has rallied by 20 pips already in pretty quick fashion and traders obviously see this as the most likely source of action in early European trade.
Edit: FXWW888 referring to large stop at .8580 that player bis trying to trigger in current trade.