Sentiment towards the AUD is shot to pieces right now and traders will continue to sell rallies in AUD/USD from here, given the strong trend. As we saw last night though, the pair looks fairly well supported around the 90 handle, and given the sizeable discount the AUD trades to forward rates, the pair should continue to find buyers around current levels.
The pair has moved to 0.9032 (at the time of writing) and on the hourly and thirty minute charts, current levels are mid-way in the range of the Bollinger bands and thus it seems we have found a short term ‘fair value’. I’d expect the price to oscillate round current levels for most of the day, although at 11:30 we do get the latest Australian trade balance print. We should see a pick-up in volatility through European trade, given the raft of data once again out of the US.
On the docket we get the weekly jobless claims, Q3 GDP revisions (expected to tick up to 3.1%) and factory orders. Good numbers here could send the AUD below the 90 handle and onto August lows of 0.8892. It’s worth bearing in mind that we have seen divergence of the daily chart, thus this could signal the pair is due a bounce and given we saw the pair fail to break 0.9000 (despite a big move higher in US yields overnight), it suggests the sellers could take profits.
Yesterday’s strong ADP payrolls report in the US has seen a number of economists revise up their expectations for Friday’s non-farm payrolls, with UBS for example taking its forecast to 190,000 from 160,000.