USD Trading Outlook (04-11-2014)

AUD/USD JPY weakness in early Europe lifted AUD/JPY from the 98.30 area towards 99.10 into NY’s open. AUD/USD lifted towards 0.8760 on this but bears pounced once USD strength took over the equation. USD/JPY’s blast-off from the 102.85 area saw AUD/USD slip from its high & sit near 0.8720 as NY got going. The USD remained firm in early NY and AUD/USD tested near 0.8700. a bounce towards 0.8715 was erased after US ISM came in well above f/c. This sent the USD and US yields higher. AUD/USD ran stops below 0.8700 and hit a 0.8683 high. A lift back above 0.8700 ensued but bears lurked and the pair sat just above 0.8690 late in the day. Traders now look to Oz retail sales & trade data for cues. They also have to contend with the ABS’ revised employment reports from Dec ’13 to Sep ’14 as well as the RBA meeting. The RBA is likely to stay on hold and harp on AUD strength. It’s likely they maintain a policy of stable rates but if they remove that stance and lean dovish AUD should get hit. If the ABS revisions are bearish AUD likely gets hit as well and we could see 0.8640/45 break. If it breaks the May ’10 low is eyed.