AUD in freefall as we look to ECB Thursday

<p>AUD took centre stage in the FX space overnight following another disappointing session for equities after the US market closed down over 200 points. The […]</p>

AUD took centre stage in the FX space overnight following another disappointing session for equities after the US market closed down over 200 points. The lifestyle currency saw fresh lows overnight as stops and option barriers were triggered through the much touted 0.9500 level. The catalyst for the move comes from a Nikkei opening up below 13,000, with AUD/JPY selling noted as Australia’s trade surplus came in weaker than expected at AUD28mn. My sources are, however, note that huge barriers reside in the 0.9380-0.9400 region and will be vigorously defended.

Note the Nikkei has now reversed all the gains it had made since BoJ day on the 4th of April where aggressive stimulus measured were announced in the new era of Abeconomics.

The dollar is trading with a softer tone across the rest of the G10 space ahead of the US jobs data tomorrow as the market continues to focus on the FED tapering debate with the dollar bulls sitting very nervously after yesterday’s poor ADP report following on from Monday’s dismal ISM data.

Today is all about the BoE and ECB meetings, with this being BoE Governor King’s last meeting with Mark Carney taking the reins as of next month. I note a US investment house now expects no further QE from the BoE following some stronger UK data releases of late notably the stronger PMI data this week. Personally I feel the arrival of Carney will bring the UK a FED style policy which will target certain aspects of the economy, notably unemployment. Like the BoE meeting today I expect no change in policy from the ECB with the attention being on Draghi’s words at 1.30pm and updated economic forecasts and any discussions on the negative rates debate.

 


EUR/USD

Supports 1.3040-1.2940-1.2840 | Resistance 1.3145-1.3200-1.3240


USD/JPY

Supports 98.00-97.30-97.00 | Resistance 99.50-100.00-100.45


GBP/USD

Supports 1.5380-1.5335-1.5275  | Resistance 1.5435-1.5485-1.5500

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