The Australian dollar continues to outperform even as the greenback back advances across the board, while the Japanese Yen extended the decline from earlier this week and remains the weakest amongst the major currencies.
The Australian dollar continues to outperform against the major currencies even as the greenback back advances across the board, but the near-term rally appears to be tapering off as it finds resistance ahead of the 100-Day SMA at 0.9062. The AUD/USD is little changed on the day and has only moved 33% of its average true range, and we may see the pair fill-in the gap from the 120-SMA (0.8950) going into the Asian trade as it looks to be carving out a near-term top this week. As the aussie-dollar fails to retrace the decline from the January high (0.9331), we may see the exchange rate hold a broad range over the remainder of the month as the Reserve Bank of Australia holds adopts a wait-and-see approach to assess the impact of the record rate hikes during the end of 2009. Nevertheless, the Federal Open Market Committee is scheduled to release its February meeting minutes at 19:00 GMT, and comments from the central bank is likely to move the currency markets as investors weigh the outlook for future policy.
The Japanese Yen weakened across the board and remains the worst performing currency against the greenback, and the low-yielding currency may continue to depreciated going into the Asian session as investors raise their appetite for risk. The USD/JPY is 80pips higher on the day after moving nearly 105% of its daily ATR, but the lack of momentum to hold above the 91.00 level could lead to a corrective retracement as the 30-minte RSI falls back from a high of 82. As a result, we may see price action work its way back towards the 50-Day SMA at 90.65, but a break below could drive the pair down towards the 120-SMA at 90.16.
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[I]To discuss this report contact David Song, Currency Analyst: <[email protected]>[/I]