Morning Fundamentals: EUR/USD Dritfing Lower

EUR/USD drifted lower during the Asia afternoon and European morning, which was more in the wake of a collapsing AUD and Kiwi then anything directly involving the Euro. Talk later in the session from other Fed Presidents other than Bernanke called for a slowing down of the Fed Stimulus program in the nearer term. This was enough to keep a lid on the pair for the remainder of the US session and into the weekend. The 50 point range over the last 10 hours of the week was a true reflection of the risk off nature a Friday should normally bring if the markets aren’t hell bent on wild swings. Euro closed the week just above 1.3050 and this is were it remains for the Monday morning Asia open.

There is no European data of note for Monday but with the more than interesting Chinese GDP q/y numbers and Retail Sales out of the States we shouldn’t see a slow day. A break for the Euro below 1.3000 should see a run towards last weeks 1.2750 bottom.

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AUD/USD was very nervous during Friday morning trade for only having Home Loans data out and what was to follow clears up the last trading days picture. A slightly below expected Home Loan result but vastly improved on the previous still saw AUD dip to 0.9130 before squeezing to 0.9185 before hitting solid offers. Increased chatter that the RBA will cut interest rates at the August meeting saw the bears take the sword to any sign of support. The break below 0.9130 was sharp with European traders noted heavy sellers as the run managed to break the 0.9000 handle for a couple of seconds. Option triggers done the price recovered to close the week around 0.9050.

A supported Euro and quiet US session stabilized the market. A short squeeze at the Asia open has AUD currently at 0.9080. AUD is really caught between a rock and a hard place at the moment. All the signs are bearish with a slowing China, Local election, commodity falls but the sharpness of the fall has been to quick and this lends itself to bottom picking. Be careful if you are in this camp.

Compass Direction
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