It should be an interesting week for the AUD, with the last RBA meeting for the year) (the next one due in February) being the key focus. It is also worth highlighting the better China PMI released over the weekend (the index printed 51.4); while Sydney saw more houses being sold under auction than ever. This week the Australian government will look to issues $1.5 billion in a five-year government bonds, which is actually the biggest issue in around two decades; if we see the same sort of demand that we did in the recent twenty-year auction then this should lend support to the AUD. At 11:30 today we get building approvals and the market expects a 5% drop on the month. I will be looking at the AUD in this week’s ‘one to watch’.
The pair has seen one-way price action of late, also gaining just over 25% since the year’s lows of 1.4387. On Friday we saw some indecision on the daily candles and thus I will be watching price action very carefully here; a pullback could feasibly materialise given the extreme positioning in the market. We need to remember that shorting the pair means you are fighting a very strong trend, and thus pullbacks will be bought by traders, however for those looking to be aggressive this is one pair that could find sellers this week.
The Nikkei is back in vogue as the index of choice for traders again, largely helped by increased inflation last week and news that companies (such as Nomura) are looking to boost wages. USD/JPY continues to make higher highs and has the year’s highs of 103.74 in its sights. At 10:50 today we get the latest read on capital spending and company profits and good numbers here could see the Nikkei finding further buyers.
Official PMI data released over the week should support the miner, however the stock seems to be missing a catalyst and has traded in a range of $38.27 to $37.18 since late October. Trading this range seems to be the way to go and I’d be looking at playing the upper and lower Bollinger bands on the daily chart. A closing break on either of these levels could see a new trend emerge, however with sideways trade in play, my favoured tactic would be trading this mentioned range.