After a slight bounce in Asian trade yesterday, the pair gave up significant ground in the US session. AUD/USD dropped to a low of 0.909 as strong housing data underpinned the greenback. The short-term downtrend remains intact and any bounces are likely to be used as an opportunity to sell the pair. Q3 Construction data due out at 11.30 AEDT is expected to show a 0.6% improvement and any misses on that front could result in fresh AUD selling.
Cable extended its gains despite BoE Governor Carney saying 7% unemployment was not an automatic trigger to tighten policy. There seems to be a general consensus that the UK economic recovery will continue and as a result every piece of data will have to impress to keep the pound bid. Later today we have revised GDP and business investment due out. In the US we have durable goods orders, Chicago PMI and unemployment claims due out. GBP/USD is approaching October highs of 1.626, a break of which will leave it facing January highs of 1.638.
The DAX continues to hang around all-time highs and recent commentary from ECB members has suggested deflation is a risk but they expect the improvement in the economy to help alleviate this issue. Later today we have a consumer climate reading out of Germany and another positive reading could help it mount another challenge at the all-time highs.
JHX is touching all-time highs at the moment and the round of encouraging housing data out of the US should help underpin the stock in Asia today. Traders should look out for a move back towards $12.50.