CROSS COUNTRY: MIDDAY SNAPSHOT & ANALYSIS OF SELECTED CROSS RATES
Markets have been fairly quiet in the final session of trade for the week, with the as expected Nonfarm payroll release and weaker ISM data failing to materially influence price action. Traders appear content on taking to the sidelines after yet another volatile and choppy week. The Australian Dollar has come under some pressure in the US session, with talk of a local newspaper article suggesting that the odds are now shifting back towards an RBA rate cut, seen as the primary driver. Despite recent talk for a unified currency and alternative to the USD, the latest Fed custodial data still shows an overwhelming amount of foreign central bank holdings of the US Dollar. On the official circuit, Fed Kohn was on the wires earlier saying that the Fed efforts to restore credit market function have been “somewhat successful.” Looking ahead, Fed Chair Bernanke is slated to speak at 16:00GMT at the Fed Credit Markets Conference in Charlotte. US equities are tracking marginally lower, while on the commodity front oil is off some 2.60%. Our Kiwi/Cad trade from this morning has been running well and we have trailed stops as per instruction to eliminate risk.
ANALYSIS OF SELECTED RATES
Eur/Aud: The cross has been undergoing a significant decline since breaking down from a multi-day consolidation, with setbacks extending to 1.8655 today ahead of the latest minor bounce. However, with daily studies now looking oversold and the cross just testing the 200-Day SMA (hasn’t been below the 200-Day SMA since July 2008), scope exists for a significant bounce over the coming days back towards the former range lows by 1.9500. The market has also been very well supported on dips down to current levels, and a loose rising trend-line off of November 2008 lows along with a bullish outside day, help to reaffirm short-term basing prospects. We are not putting on any specific recommendation here, but traders may want to look to buy a break of Friday’s high (not determined yet) on Monday, with stops to be firmly placed below 1.8650.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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Monday-Friday (between 5:30am-6:30am EST)
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“Cross Country” – A Midday Fundamental Update, along with Technical Analysis of Selected Cross Rates.
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