MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
Softer than expected US PPI data and much weaker retail sales have helped to set the tone for Tuesday’s North American session of trade, with the USD benefiting and stocks falling off on a flight to safety mentality (business inventories were slightly weaker). However, there has been a growing contingency of traders who think that we could indeed be in the process of bottoming and this has helped to help keep stocks relatively stable. Citigroup has been rallying sharply today, now back above $4 on a rumored short squeeze. Comments from ECB Constancio have also been seen weighing on the Euro today after the ECB official said that the European recession appeared to be deeper that the US recession. All eyes now turn to President Obama due to speak at 15:30GMT, followed by Fed Chair Bernanke at 17:30GMT on the financial crisis. Excerpts of Obama’s speech have been released with the President to say that there are glimmers of hope for a recovery while also cautioning that more pitfalls remain in 2009. Traders will also be looking for additional insight from Bernanke who earlier said that he is “fundamentally optimistic” about the US economy.
[B]ANALYSIS OF SELECTED RATES
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Eur/Aud: The cross continues to trade with a heavy tone since breaking down from a multi-day consolidation in late March. However, with daily studies showing oversold, scope exists for a bounce out from current levels back into the middle of a very familiar range that has defined trade since October 2008. Both daily stochastics and RSI reside well in oversold territory and given the additional divergence from all relevant moving averages, the risks from here are for a significant corrective bounce over the coming days. We have twice attempted a long position (both trades produced flat to minor gains) over the past several days (including Monday) and we will once again take a shot on Tuesday with the potential upside too compelling to ignore. A hammer close on Monday reaffirms our bullish stance. Position: Long @1.8250 FOR A 1.9000 OBJECTIVE, STOP @1.7950. Stops to be trailed to cost on a break back above 1.8400. If 1.8400 not broken, position to be closed out at NY close (5pm ET) on Tuesday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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