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Day five: our AUD/USD trade

AUD/USD continues to find buyers around the 90 handle and a look at stochastic indicators (on the daily chart) highlights good divergence, with price making a lower low, while the stochastics made a higher low.

This could signal a short-covering correction is imminent, although I would be looking more closely at divergence seen in GBP/AUD and the potential for a move lower in that pair.

The trend in AUD/USD is firmly lower, with the MACD (again on the daily chart) firmly below zero, suggesting rallies will be contained within the bearish trend. Also if you look at the five-, ten- and twenty one- day moving averages they are all clearly aligned and headed lower, suggesting again that the momentum behind the short-term trend is also strong.

There could be a chance we see AUD/USD gravitate towards the 0.9100 level today, with the Australian treasury auctioning A$1.5 billion of five-year bonds (the biggest issue in many years); solid demand here, which I thoroughly expect, could provoke short covering in the AUD.

From here, traders will turn their attention to the US payrolls report and a number closer to 200,000 (market consensus currently stands at 185,000) could send the USD higher across the board and push AUD/USD back down to 0.9000. A number well above consensus of say 250,000 would be hugely significant and would create sizeable USD inflows, subsequently pushing the market consensus for Fed tapering to January and perhaps even December. It would also coincide with a move in the US ten-year bond to 3%, which again would be USD positive.

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