4:00 am Dec IFO Survey - Business Expectations (exp -$61.1 bln, prev -$66.0 bln) Dec IFO Business Climate Survey (exp 98.0, prev 97.8) Dec IFO Survey - Current Conditions (exp 98.0, prev 97.8) Dec Business Expectations (exp 98.0, prev 97.7) 5:00 am E-12 Nov CPI (exp 0.4%, prev 0.4%) 8:30 am US Q3 Current Account (exp- $198.0 bln, prev -$195.7 bln)

As the yen trades at its best level in 6 weeks, accumulating its biggest weekly gain versus the dollar in 6 years around the 115.50s, the Bank of Japan today chose not to stir matters further by making its usual 7-2 vote to maintain its current 4 ½ year quantitative easing policy and keep the reserve target at its 30-35 trillion yen range.
BoJ Governor Fukui then said the Bank was closely watching for the CPI to rise above zero and that it was assessing whether the firming yen was impacting the economy. Last week, Fukui said last week core inflation could start to rise by end of the year before showing ``solid gains'' in Q1 of next year.

The fate of the yen should remain in the hands of the market and to what extent it would interpret the timing of any policy shift by the Bank. Should the Bank’s forecast of above zero core CPI materializes by year-end, then we could see a modest policy reduction of quantitative easing as early as next January at which point should intensify the next round of yen gains.

The speed of the dollar decline should largely depend on the combination of the Fed’s veering away from its hawkishness and the BoJ’s moving away from its dovishness. We stick with our end of year 117 target

The weekly USDJPY chart below shows the pair is fast approaching the trend line support of 115, before a testing the key foundation of 114—the 38% retracement of the 101.60-121.36 rise. The significance of this target is also its proximity to the 200 week average of 114.10, which was last broken in late October before the pair was propelled by over 7 yen. Chances of a rebound remain largely limited at 116.50.



US markets turn to Q3 current account deficit

In the same week where the October trade deficit hit an all time high of $68 billion, albeit coming in well below a blockbuster $107 billion in net foreign capital flows into the US for the same month, markets will turn to the broader current account external balance for Q3, which will not include parlous October trade report.

We see this morning’s Q3 current account deficit to push up to $198 bln from $195.7 bln in Q2, less than the consensus forecasts of $203-$205 bln. That is because the trade gap is seen temporarily stabilizing due to a boost in unilateral transfers from insurance and reinsurance claims received by US companies from foreign insurance. The unilateral account should also be boosted by donations from abroad for hurricane relief.

Nonetheless, it is possible for any improvement in the Q3 data to be toned down by a downward revision in the Q2 figures. Markets will be especially watching the current accounts % of GDP, and whether it worsened from the 6.3% figure in Q2. Any reading above Q1’s 6.5% should prolong USD selling.

The chart below shows that the trade deficit has been sufficient financed by US-bound foreign capital flows for the last 5 months but this could well change as early as the December data in light of the sell-off in US equities.



Euro’s turns to key IFO

In this unique week where the Germany’s IFO business survey is released in the same week with its ZEW Indicator of Economic Sentiment, the euro could feed on a powerful rally on a potential double-treat for the euro currency. Earlier this week, the ZEW was reported to have soared by a remarkable 22.9 points in December. The November IFO’s climate index fell to 97.8 in November from a revised 98.8 in October, while the business current conditions index dropped to 97.8 from October’s 98.9. But that was because the IFO survey had jus come off its 5-year high reached in the October figure. We see room for upside surprised to be more beneficial for the already upwardly biased, which could solidify the argument for more near-term rate hikes by the ECB.

Resistance reverts towards the $1.20 figure—the 38% retracement of the $1.2587-$1.1639 decline, followed by 100-day MA of $1.2060. Support climbs to $1.2010, backed by $1.1970.

Aussie caught in Yen’s cross fire

Despite the emerging sell-off in the greenback, the Aussie/USD rate is down over a full cent to 74.40 cents courtesy of the soaring Japanese currency. This especially the case as carry-traders continue to unwind from the classic Aussie long - yen short trade on signs of a looming end to Japan’s quantitative easing policy.

We think the current route in AUD/JPY could probe the Reserve Bank of Australia into a January rate hike, which could have minimal effects on the pair as it would be deemed as the last or near the conclusion of the tightening campaign.

Failing to accumulate fresh gains past the midpoint of the 10-mnth old falling channel, AUDUSD support starts at 73.80—50% retracement of the 67.71-79.81 move. Upside capped at 75.38 and 75.80.

Just one day after a record trade deficit precipitated greenback decline, a record reading in the capital inflows in the US helped the dollar erase most of its yesterday’s losses against most majors. The $106.8 billion worth of purchases of US securities more than made up for a negative $68.9 billion trade balance, reassuring investors that foreign appetite for dollar-denominated assets is not waning. European and minor Asian central banks all increased their holdings of US treasuries. Notably absent from the increase however were the central banks of China and Japan, who until now were reliable and largest creditors of the US debt. And while the dollar was able to rejoice in the TICS-driven rally, retreat on the part of Chna and Japan to continue financing US spending is certainly concerning.

This morning’s inflation-gauging CPI data for November showed a historic decline of -0.6%, a figure not seen since 1949. The bulk of the deterioration is attributed to a record 8% drop in energy prices with most other sectors showing modest increases. Indeed, the core CPI reading was far less calamitous at 0.2% as expected. The headline figure record drop is nevertheless very significant. Recall the reference in this week’s Fed statement warning about the risks of “elevated energy prices (having) the potential to add to inflation pressures…” Further evidence of inflationary easing detract from the impetus of the Fed to carry out its tightening campaign much longer.

US national industrial and key regional manufacturing sectors reported improving figures. Industrial production rose for the second consecutive month after a September decline caused by the Gulf Coast hurricanes, gaining 0.7% in November and a revised 1.3% in October. Analysts were expecting a more subdued rise of 0.5%. Previous October figure was also an impressive gain of 0.9%. In the regional manufacturing sector, both the Philly Fed Index and the Empire Manufacturing survey improved from last month’s figures of 11.5 and 22.8, arriving at 12.6 and 28.7 respectively. New York area’s manufacturing activity of 28.7 was a 2005 high and largely unexpected – analysts were predicting for the index to come in lower than before at 18.5.

On the jobs front, weekly claims rose once again, arriving 1k higher at 329k and lifting the 4-week moving average by 6k to a 4-week high of 328.75k. Last week’s data was also upwardly revised to 328k from 327k.

SNB raises interest rates, more hikes to come

The Swiss National Bank broke away from 15-month long level of interest rates, hiking this morning as expected by 25bps to 0.50-1.50%. The central bank had signaled tightening earlier based on significant progress in its economic recovery. Furthermore, SNB said it will "continue to gradually adjust its monetary policy" despite not being under pressure from inflation risks. Its inflation forecasts for 2005 and 2006 remain unchanged at 1.2 pct and 0.8 pct respectively. "We still have time for further adjustments. This is only a first step,” said SNB chairman Jean-Pierre Roth.

USD/CHF declined 40 pips following the rate hike to CHF1.2810. The strength of the US data broke the pair’s fall however, taking it to CHF 1.2890’s by the end of the session. Further resistance is found at CHF 1.2970 while key support marks the 1-month low at CHF 1.2790.

Trichet determined to curb inflationary pressures

In his most stern remarks to date following the December 1st rate hike and the ensuing controversy over the future monetary policy, European Central Bank president Jean-Claude Trichet said that the central bank ought not to wait for inflation to materialize before taking action. “Our citizens expect us to be vigilant on price stability and they are not really satisfied with the present situation… Prevention is better than a cure.” With the latest Eurozone inflation figures of 2.4% persisting above the ECB mandate of 2.0%, today’s remarks change the question of “will ECB raise rates further?” to “when will further tightening take place?”

In other news, the Eurozone labor costs came in at 2.2% for the 3rd quarter, below expected 2.4% as well as the previous quarter’s data of 2.3%. Further evidence of inflationary easing will be necessary however in order for Trichet to scale his increasingly hawkish tone.

The euro rallied in early morning session on ECB president’s hints of impending further tightening, reaching an intra-day high of $1.2038. But strong US data and profit taking from this week’s euro rally stemmed the greenback decline as EUR/USD fell back to $1.1960 by session’s end. Our key resistance level of $1.2060 from yesterday was preserved along with the interim support of $1.19.

Sterling cheers strong retail sales but wounded by US data

UK economic data finally gave the pound something to celebrate with November sales rising 0.7% from October and 2.1% over the past year, marking respective 6 and 9-month highs. Analysts were calling for a marginal 0.3% gain after last month’s 0.2% increase. The housing sector in the UK is also appearing to be stabilizing after the rate cut 4 months ago. House prices will rise 4% in both 2006 and 2007 said Royal Institution of Chartered Surveyors, dispelling gloomy predictions about housing decline made earlier.

Sterling rallied briefly after the sales data but then fell over 120-pips in this mornings barrage of data from the US to end the session at $1.7640.

Late October high at $1.79 remains a key resistance, while interim support is found $1.76.

USD/JPY slide persists

The yen was the only currency able to withstand the broad correction of this week’s dollar drop. USD/JPY fell another 100 pips to close the session at JPY 116.30, setting an intraday low of JPY115.80. The market appears to be convinced that the quantitative easing that sent the yen to the canvas and propelled the Nikkei rally will conclude sooner than expected. After broad sell-off yesterday, Japan’s stock index fell another 210 points today.

USD/JPY pierced through our support level of JPY 116 prior to pulling back. Today’s JPY115.80 low is the next interim-support, with the prospects of further drop to JPY114.60 appearing more likely. Near-term resistance is shaping at JPY 117.

The US dollar extended yesterday’s post-FOMC statement losses on the announcement of a record US trade deficit. Despite widespread expectations of a deficit easing in response to declining oil prices, with analysts calling for a $62 billion deficit, the trade imbalance for the month of October instead reached a new monthly high of $-68.9 billion. September deficit was revised slightly lower to $66 billion from $66.1 billion.

The specifics of the trade balance figures will be covered in today’s article, but the effects of the deeper than expected deficit were unambiguous. The greenback sold off sharply, hitting multi-week lows against the majors while sliding most notably against the yen.

The dollar did receive a dose of good news when the CEO Economic Outlook Index hit its second highest level ever, boding well for 2006 growth prospects. The nation’s top corporate executives issued a rosy outlook, with more than half seeing increases in capital spending and employment.

Commodities markets did not cheer the dollar decline as it would be generally expected. Gold rally finally appears stalling as the precious metal continues to fall hard this week in profit taking. After a high just above $540, gold was seen retreating to $506 while deviating from it’s traditional negative correlation with the direction of the greenback. Meanwhile, oil prices trended lower when the Energy Department reported that distillate supplies fell only 100k barrels and crude inventories actually rose 900k barrels. After targeting $63 per barrel, crude contract per barrel declined below $62.

Euro hits fresh 1-month high, meets stiff resistance

The single currency broke to the upside after the announcement of US trade data, reaching a fresh monthly high at $1.2060. However, in the remainder of the session, the euro was seen correcting from its 5-day rally. As the chart below shows, the $1.2060 high marks the upward-trending resistance while also providing a resting place for the 100-day moving average. Recall our target month-end level of $1.1950 – if the USD benefits from improving GDP next week but does not incur sustained damage from projected TICS and Current Account figure declines, that level prediction may prove to be quite accurate.

On the Eurozone side of the coin, markets anticipate another strong IFO survey on Friday. Overall, the economic outlook for E-12 is seen as gradually improving. Eurozone’s 3 top producing economies – Germany, Italy, and France – are reporting robust growth expectations for 2006, with Germany’s most notably seeing a 21-month high in investor confidence as measured by ZEW survey this week.



$1.2060 is our key target resistance level, while near-term support should be capped at $1.19.

Sterling gains subdued by weak UK labor data

The pound was wounded overnight by lower than expected October average earnings figures from the UK and thus was not able to benefit from post-trade data dollar decline. Headline earnings were up only 3.6%, below the previous 4.1% and consensus estimates of 3.9%. The weak data implies that the chances of inflationary pressures created by the rise of energy prices are not proving to translate into increasing wages. In turn, the absence of inflationary threat will make it that much more difficult for the BoE Monetary Policy Committee to justify not cutting interest rates in the face of deteriorating fundamentals. Tomorrow’s retail sales data decline should accentuate increasing pressure on the consumer and will further buttress the argument for February easing.

Sterling did reach a new 1-month high at $1.7808 but pulled back to $1.7720’s by the end of the session to rest along the 100-day moving average level. Late October high at $1.79 represents a key resistance, while support is found at $1.7650 and $1.76.

Yen propelled by dollar weakness and Tankan implications

The yen’s rebound is unfolding at an even faster pace than its 3-month 12-yen decline. In a biggest daily drop since March of 2002, USD/JPY fell 2.5 yen today on the combination of weak trade data and FOMC sentiment shift in the US and the strength from the Tankan survey overnight. More broadly speaking, implications of impending pauses of tightening from the Fed and the quantitative easing in Japan diminish the attractiveness of the interest rate differential driven carry trade.

USD/JPY fell as low as JPY116.69 before pulling back to JPY117.30’s by the end of the session. JPY116.50 and JPY116 support the pair on further downside, while JPY118.20 appears to be the pair’s upside limit.

Loonie strength persists but clouds growth outlook

At first glance, today’s October trade balance figures from Canada can be seen as grounds for further loonie gains. Canadian trade data left its US counterpart much to be desired, arriving at a surplus of CAD 7.2 billion while handily beating previous month’s figure of 7.0 billion and that of analyst expectations of 6.9 billion. Looking closer and outside the high natural gas exports however, we actually see a narrowing in trade surplus of goods. This can be attributed to a rise of imports on the part of Canadian manufacturers, who find it increasingly more profitable to order machinery from abroad due to the appreciation of the Canadian currency. The implications of resulting pressure on 2006 growth projections cloud the sustainability of BoC tightening, and that is why we saw the loonie decline despite weak US trade data today.

USD/CAD may have reached a near-term bottom when loonie rallied to CAD1.1424 before correcting to CAD1.1512 to finish the session. CAD 1.1580 and CAD 1.1640 mark resistance levels; support starts at CAD1.1480 and persist at CAD1.1420.

Aussie at fresh highs, targets 200-day MA

Australian dollar saw fresh 1-month highs at $0.7576 but also retreated in the face of significant technical resistance. Resistance level tested was the 61.8% retracement from the $0.7762 - $0.7260 move, while key resistance is subsequently found at the late October high at $0.76, which also happens to coincide with the 200-day moving average.
Support is capped at $0.7520 and $0.7480.

8:30 am US Oct Trade Balance (exp -$61.1 bln, prev -$66.0 bln) 8:30 am CAN Oct Trade Balance (exp CAD 6.9 bln, prev CAD 7.0 bln) 7:30 pm AUS RBA November bulletin

The US dollar remains battered across the board after Japan’s closely watched tankan survey on business confidence rose to its best a level in a year, as confidence among large manufacturers reached 21 in Q4 from 19 in Q3. The non-manufacturers tankan hit a 13-year high at 17 years, with the figure indicating the margin at which optimistic. One day after Germany’s ZEW investment sentiment shot up to its best level in 22 months, Japan’s tankan survey conveys better than expected corporate sentiment, lifting the yen to a 3-week high against the dollar. The sell-off in the US currency intensified in Tuesday afternoon after Federal Open Market Committee dropped a key reference to the strong elements of the economy (“robust underlying growth in productivity…ongoing support to economic growth”), and substituting the 19-month old “measured” reference for the pace of its policy tightening with a vague phrase that makes a January pause plausible.

Although the door does remains open for further rate hikes, the difference this time is the lack of conviction by the Fed for further rate hikes and the removal of positive language, which does not make a January rate hike a 100% certainty as was the case in each of the past 13 meetings. In other words, the language was changed in a way that reduces the certainty going into the next meetings, unlike the case in previous meetings.

Said differently, when looking at the FOMC statement, we always saw an ensuing rate hike. Today’s altered language makes way for the possibility of a rate hike as well as for a pause.
We expect this morning’s US trade deficit to stabilize to $61 bln from the record high $66 bln in September when oil imports rose 4.0% to $23.8 bln. The combined effect of the overall decline in total; imports coupled with the rise in petroleum imports has increased the share of petroleum share of total imports to a record 14%. Looking ahead to today’s report, we see the oil contribution diminishing markedly following an aggregate 15% drop in oil prices in October and November, which woukd stabilize overall imports. Nonetheless, the trade figure may stabilize to only $64-65 bln if we aircraft exports do rebound following their 2.6% decline.



As oil prices begin to break above the $60 per barrel amid cold weather in the North East of the US, we illustrate the break of the 3-month trend line resistance in oil, which is testing the $63.93 resistance, the 50% retracement of the drop from the Sep high thru the Dec low. We see the $65 level a possibility before year-end, especially now that OPEC chose to maintain currency production levels.



Euro nears $1.2050

EURUSD is making its first 5-day advance in 4 months, gaining by 3.5 cents as the impact of the Fed language change combined with strong ZEW survey and tankan survey conspire in lending the a boost to the dollar’s principal opponent currency. With the ZEW Indicator of Economic Sentiment for Germany soaring by a remarkable 22.9 points in December, markets can expect further strengthening from Friday’s release of the Dec IFO survey, following the best showing in 5 years seen in the Nov figure. This could also solidify the argument for more near-term rate hikes by the ECB.
Breaching past the $1.20 figure—the 38% retracement of the $1.2587-$1.1639 decline, EURUSD is now setting target towards the 100-day MA of $1.2060. Support climbs to $1.2010, backed by $1.1970.

Dollar drops 2 yen after tankan

The dollar dropped a full 2 yen to 118.35 after the Japan’s leading business sentiment survey--tankan –hit its best level in a year. Confidence among large manufacturers reached 21 in Q4 from 19 in Q3, while the non-manufacturers’ tankan hit a 13-year high at 17 years, with the figure indicating the margin at which optimistic assessments surpass their pessimistic counterparts. Of significant importance, plans for capital expenditure amid large companies are seen increasing by 10.4% in the current fiscal year, the highest in 15 years, while capex amid large manufacturers is seen rising 17.3% from the 16.2%.
The yen makes its biggest 1-day gain in 5 months, nearing the bottom of the Bollinger Band and testing the next support at 118.15-20. Support follows at 117.75. Upside seen limited at 119.

In its 13th interest rate hike of the present tightening cycle, the Federal Open Market Committee made the much-anticipated change in its accompanying policy statement by dropping a key reference to the strong elements of the economy (“robust underlying growth in productivity…ongoing support to economic growth”), and substituting the 19-month old “measured” reference for the pace of its policy tightening with a vague phrase that makes a January pause plausible.

Indeed, the Fed allowed room to hedge itself for further rate hikes if the need arose by referring to: “…possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures”. But the Fed did signal that any future tightening can no longer assumed to follow automatic and is only a function of the discretion of the Fed, which is dependent on the upcoming data: “some further measured policy firming is likely to be needed”

We reiterate: the door does remain open for further rate hikes. But what is different this time is the lack of conviction by the Fed for further rate hikes and the removal of positive language, which does not make a January rate hike a 100% certainty as was the case in each of the past 13 meetings. In other words, the language was changed in a way that increases the UNcertainty going into the next meetings, unlike was the case in previous meetings.

We deem a 60% chance for a January 25-bp rate hike to 4.50%, which is to be followed by a rate cut in Q4, bringing down the Fed funds rate back to 4.25% by end of 2006.

As expected, the dollar is falling across the board, further breaching 3-month trend line support against the euro and the pound, while breaching below the 120 level against the yen and hitting fresh 13-year lows against the Canadian dollar. We did indicate that any change in the statement should be dollar negative as was the case after the release of the Nov 22 minutes, when the EURUSD gained as more than a full cent and the yen pushed up over 70 pips. Carry trade enthusiasts are eyeing any change in signals from the Fed that would add some finality to the accumulation of the dollar’s yield luster.

Said differently, when looking at the FOMC statement, we always saw an ensuing rate hike. Today’s altered language makes way for the possibility of a rate hike as well as for a pause.

Just like last Dec 04 / Jan 05?

The unfolding situation in the dollar, the Fed and the European Central Bank is a near mirror image of that of late last year/beginning of this year. Today, we have a weakening dollar as a result of the Federal Reserve hinting at the end of its 18-month tightening campaign, and an ECB that could deliver more rate hikes than was previously expected--depending on the deterioration of price stability and signs of upside growth prospects. This is the contrary of late Dec 2004-early Jan 2005, when the US dollar was strengthening amid an increasingly hawkish Fed and political (and market) pressure for the ECB to cut interest rates.



December 13, 2005

Dec ZEW Survey - Current Situation (exp 41.0, exp 38.7) 8:30 am Nov Retail Sales (exp 0.4%, prev -0.1%) Nov Retail Sales excl autos (exp 0.0%, 0.9%) 8:30 am Can Nov Leading Indicators (exp 0.4%, prev 0.5%) 10:00 am Oct Business Inventories (exp 0.5%, prev 0.5%) 2:15 pm FOMC Rate Decision (exp 4.25%, prev 4.00%)

The dollar’s all-round sell-off has somewhat stabilized in early European trade ahead of this morning’s December ZEW survey from November retail sales from the US, serving as a necessary distraction before this afternoon’s much anticipated rate hike from the Fed. The dollar’s partial bounce (30 pips off its 5-week lows against the euro and 30 pips bounce off its 2-week low against the yen) has been accompanied by a $6.00 drop in gold to 521 amid profit-taking in Asia. We expect the market to remain biased against the dollar in the event of firm(weak) ZEW(retail sales) but somewhat neutral in the face of positive USD data as certainty for a change in the Fed’s language has escalated. Whether the Fed’s change takes the form of either introducing a time element to the pace at which accommodation is removed, or spelling out its data dependence as the basis of the continuation of its measured tightening, the end result should be dollar negative

And we do remind you how the dollar sold off across the board following the Nov 22 release of FOMC minutes when they indicated that: “Some members cautioned that risks of going too far with the tightening process could also eventually emerge" and that “…policy setting would need to be increasingly sensitive to incoming economic data”. The minutes also indicated that:”core inflation had been subdued in recent months”.

This morning’s November retail sales are expected to show their shine mostly in the headline figure mainly due to a pick up auto sales, without which core sales—excluding gasoline are expected to have been stagnant, or even down as much as 0.2%. As the chart shows below, a drop in the core figure (ex autos) would be the first drop in 17 months, in which case could be scrutinized by an increasingly dollar-cautious FX market.













Euro set on $1.20 target

The euro’s retreat towards the $1.1930s from its 5-week high of $1.1982 can be pared as early as early as European trade, especially in the event that a +40.0 ZEW reading and the first drop in US core sales in over a year and half are sufficient motives to direct the worst of both worlds for the USD scenario. With an expected strengthening in today’s release of the ZEW and Friday’s release of the IFO survey, markets can well begin interpreting those as the strength deemed necessary for the ECB to lean towards further tightening.
Soaring past the 3-month trend line resistance (see chart), EURUSD seems set to test the $1.20 target—the 38% retracement of the $1.2587-$1.1639 decline. A breach above it is likely to pare back towards the $1.1980s, before an additional attempt towards $1.2030. key resistance sands at the 100-day MA of $1.2065. Downside limited at $1.1930, backed by $1.1880.



USDJPY pulls back from 121

USDJPY takes a break from the periodical remarks on quantitative easing from senior government officials and BoJ policy makers as China-take center stage after People’s Bank of China’s Yu addresses the Reuters story of the excessive Chinese USD exposure, by stating that Beijing will not engage in drastic or sharp steps of FX diversification i.e. dollar selling, but will instead slow the pace of FX reserve build up before a subsequent gradual scalding down in order to not to roil markets. Any remarks indicating no immediate or near-term FX shift from China are generally seen as dollar positive. Although Yu did say that an FX shift would take 1-2 years, this is not seen as particularly surprising to the markets, which are open (including Forexnews) to the possibility of 1.8%-2.1% yuan/USD revaluation within the next 4 weeks.

We could see further yen gains next week upon the release of last week’s IMM data which is expected to show a retreat in bearishness since the yen’s 33-month lows were attained last Monday, after which the currency edged back up towards the 120.00--sufficient time for the following week’s IMM data to reflect a drop in yen negative-bias.
We go back to the 4-hour RSI, which despite the uptick from its 38.0 low, does remain under the 50-reading. We see interim resistance at 120.35-40,followed by 120.70-75. Key foundation remains at 119.55-60, followed by 119.00.

Aussie awaits fate of US high-yielder

While a change of Fed tact might signal the beginning of the Fed’s tightening over the next 1-2 months, the Aussie may not sustain any similar decline as could be in the event of the USD. With prices of commodities remaining robust and the Reserve Bank of Australia raising the odds of a Q1 rate hike, we could see AUDUSD reaping any post FOMC USD losses, as a pause by the Fed would not necessarily imply a dovish for RBA.
We note that Aussie’s bullishness reached a 2-month high in the IMM market last week when net longs soared 174% to 15,712 contracts, as the Aussie combined building cautiousness ahead of the Reserve Bank of Australia rate decision with the greenback’s overall retreat for the week.

As the chart shows Aussie crossing above the midpoint of the 10-mnth old falling channel, we see interim resistance at 75.75-80, before we attain the next considerable target of 76.10. Key resistance stands at 76.25—the 50% retracement of the 79.86-72.61 move. 38% retracement at 75.38 and the 100-day MA at 75.30 hold as light support, backed by key foundation of 75.00