Bye bye Aussie

GBP: MPC member Weale speaks early on, but only small risk of an impact on sterling.

CAD: Inflation data is released at 12:30 GMT. The CAD has performed well in the face of the stronger dollar, only easing modestly vs. the greenback and holding below the 1.02 level for the most part. Inflation is seen falling further to 0.6% on the headline measure, with the core rate falling to 1.2% (from 1.4%).   A weaker number could well serve undermine the resilience of the CAD seen so far this month. See how to trade the Canadian Core CPI with USD/CAD.

Idea of the Day

The Aussie has had a tough time of it this week, down nearly 3% vs. the dollar.   The price action seen is indicative of longer-term investors bailing out of positions on the back of the move below parity, but there are a number of other factors at play.

More rate cuts are possible for this year, the commodity boom is peaking and the shine has been taken off Australia’s comparatively strong fiscal position.

Still, on the daily chart the RSI is into oversold territory so the risk of some corrective action is growing, given that AUDUSD has fallen for 9 of the past 10 sessions.   This is a greater risk at the end of the week when there is little in the way of key data for the US dollar on the agenda.

Technical:    AUD/USD Continues Dramatic Plunge to Establish New Lows

Latest FX News

JPY:  Proving to be fairly resilient during the Asia session, with strong machine orders data (rising 14.2% MoM) providing some yen support at the margins. USDJPY is holding below the highs of the week (seen Wednesday at 102.76).  Abenomics showing early success – Where next for USD/JP?

AUD:  Another weak session for the Aussie, with the price action indicative of liquidation of longer-term positions. AUDUSD made a new low for the year at 0.9736.

USD:   There was a sharp reversal of fortunes for the dollar as compared to last Thursday, both on the back of the weekly jobless claims data. In the middle of this week, the dollar index came within a whisker of reaching levels last seen in the middle of 2010 and a 6 day winning streak was broken.

GBP:  The move above the 1.52 level on GBPUSD is indicative of buying interest emerging in the wake of the more positive messages seen in the Inflation Report earlier this week.

More:  AUD/USD Set to Fall to 0.60?

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