Riding on strength in Asian stock markets, commodity currencies rally across the board as the week starts. Following rebound in US stocks on Friday, Nikkei gapped higher today, remained firm throughout the session and closed 1.3% higher. China stocks also managed to rose mildly even though they pared some gains towards the close. AUD/USD and NZD/USD are both staying firm above August high and are extending rally in early European session. European majors are generally higher against the greenback but remain in range so far.
G20 statement after the meeting over the weekend said that it's not the timing to remove economic stimulus yet even though the global economy looks brighter than it was at las meeting in April. They would work together with IMF and FInancial Stability Board to develop cooperative and coordinated exit strategies even though the timing of the policy reversals may vary.
The economic calendar is light today with US and Canada on holiday. EUrozone Sentix Investor confidence is expected to improve from -17 to -13.7 in September. German Factory ORders are expected to rise 2.0% mom in July, with yoy rate down -20.6%.
The dollar index drops mildly today but after all it's still staying in range of 77.76 and 78.93. We're still neutral in the index as long as it's in this range. But a break of 77.76 support will suggest that recent price actions from 77.43 are merely consolidations in the larger fall, in form of triangle. In such case, dollar index will likely drops further to a new low below 77.43. On the upside, above 78.93 will argue that rise from 77.43 might indeed be resuming and break of 79.51/79.66 will confirm that it has indeed bottomed out.
AUD/USD Daily Outlook
Daily Pivots: (S1) 0.8409; (P) 0.8472; (R1) 0.8565; More
AUD/USD's rally continues today and at this point, intraday bias remains on the upside and sustained trading above 0.8519 key resistance now sets the stage for further rally to 61.8% projection of 0.6284 to 0.8262 from 0.7702 at 0.8924. On the downside, below 0.8500 minor support will turn intraday outlook neutral and bring consolidation. But break of 0.8239 support is needed to indicate AUD/USD has topped. Otherwise, short term outlook remains bullish.
In the bigger picture, AUD/USD is trading above medium term rising trend line (0.6284, 0.7702) and thus, rise from 0.6282 is still in progress. Sustained trading above 0.8519 will argue that rise from 0.6008 is developing into another up trend, rather than being a correction to fall from 0.9849 (08 High). In such case, strong rally could be seen for a retest of 0.9849 high next. On the other hand, failure at the current level, followed by sustained break of the trend line support will revive that case that rise from 0.6008 is corrective in nature. Further break of 0.7702 support will confirm that such corrective has completed and will turn medium term outlook bearish for 0.6284/7267 support zone first.
Economic Indicators Update
|08:30||EUR||Eurozone Sentix Investor Confidence Sep||-13.7||-17|
|10:00||EUR||German Factory Orders M/M Jul||2.00%||4.50%|
|10:00||EUR||German Factory Orders Y/Y Jul||-20.60%||-25.30%|
|US; Canada Holiday|