USD Trading Outlook (01-10-2014)

AUD/USD Broad based USD strength in Europe’s morning saw most of Asia’s gains erased. The pair fell from the day’s 0.8768 high & sat near 0.8720 at Ny’s open. Further USD gains early on saw NY hit a low of 0.8706 but no further losses were possible. EUR/AUD’s plunge from above 1.4585 towards 1.4420 and some give backs in USD’s rally combined with some soft US econ data to allow AUD/USD a lift from the NY low. The rise saw the pair near 0.8760. Short covering into tonight’s Oz retail sales & China’s Sep NBS Mfg- PMI likely aided the lift. Late in the day the pair sat just below 0.8760. The market is positioned short so topside surprises to the Oz & China data later may see a decent squeeze. Oversold day/week RSIs need unwinding and may exacerbate a squeeze should one take hold. If the data is rotten then the 2014 low is likely back in play.