AUDUSD
Australian dollar shorting was consistent on the day and tops our list of three market movers at a 1.1 percent drop for the New York session. Plenty of reasons filtered through the market to exit out of long Aussie positioning as AUDNZD cross selling persisted for consecutive sessions. The dip triggered stops to the downside on the 0.7650 and 0.7640 figures to trade down as low as 0.7599. Adding to the sentiment was a dollar strength pullback on the day following a considerably higher than expected manufacturing report from the Philadelphia region. The report lent some strength to keep hopes alive of further tightening in the worlds largest economy.
Subsequently, outflows in gold further exacerbated the momentum as gold contracts n the New York Mercantile Exchange tumbled from $630 to $613 to hit three month lows. The decline was only further worsened as the CRB index failed to break higher technically, suggestive of modest pullback in the commodities realm. As a result, with the Aussie economy being correlated with such investments, the underlying currency suffered on the day.
Sellers were well aware of the longer term daily downtrend from 0.7988-0.7700 as the current resistance coincided with previously massive protection of the 0.7700 option barrier. As it stands, resistance is likely to keep pressure on the pair at the 0.7677 figure (closing price on April 6th 2004) with barrier test below at the 0.7609 (23.6 percent fib level from the monthly move) and 0.7544 (38.2 percent fib level). A further break lower would spell an imminent run for bears, with a likely bottom purporting secondary tests of the aforementioned levels.
AUDJPY
Profit taking on the recent longer term run up fueled todays decline with major currency pair shorting exacerbating the AUDJPY dip in New York. Hitting technical resistance at the 89.00 figure, the cross sold off to trade as low as 88.00. Now taken back a bit, tomorrows data may add more fuel to the fire as economic data is expected to show some signs of growth in the Japanese economy. Expected for tomorrow will be sales reports on two different levels in the land of the rising sun. Should figures turn positive, or at least lessen the blow of the 2 percent declines seen last month, speculators are sure to spark a notion of further rate hikes in the near term. The sentiment would coincide with market thought that the two lone hawkish dissenters may have more ammo the next time central bankers meet if evidence of growth mounts.
Technical aspects are continuing their call for downside in the cross as a retracement back to support at the 87.50 figure remain imminent. However, at this point, testing the 87.98 figure (23.6 percent fib from the June 06 August 06 bull wave) a confirmed below would be needed before the assumption becomes reality. Should the level fail to hold though, bears look ready to pounce on the 87.11 level.
EURAUD
Traders bid up the EURAUD cross as the market was overwhelmingly bearish Aussie on an AUDNZD cross short opportunity and long Euros on dollar pessimism in the morning. Overall tepidness in the consumer price index purported Euro weakness earlier on as inflationary pressures abated to a 2.4 percent clip on the annualized figure. However, with dollar data comparatively lackluster, market participants sided with the Euro counter on the day additionally boosting the major slightly higher earlier on. The sentiment spilled into the cross market buoying the EURAUD and taking the pair higher to an imminent test of the 1.6900 figure. Subsequently, it rounds out the top three movers on the day and presents one of the biggest basis point gainers in the North American session.
Profit taking is likely to ensue as we head into the Asian session following the long bodied candle on the daily perspective. As the near term consolidates, price action is looking to test the 1.6801 level (23.6 percent fib level from the days move) on the 60-minute chart with a likely break lower being capped by the 38.2 percent fib at 1.6760. In textbook fashion, should the support level fail, bears are likely to pounce on the 1.6726. However, a sustained move higher would see imminent tests at the 1.6900 figure, where seller await to cap gains.
