The market has quietened down after some at times frenetic trading activity. AUD/USD is hanging onto the gains made immediately after the Chinese data which suggests to me that the short-term market might still be short and we may see another short-covering spike higher later today. That said, the strong Chinese data also probably means that there may be more Chinese interest rate hikes to come later this year and that may be bearish AUD in the medium term.
USD/JPY is also quiet around 79.40. Dealers will not try selling it during Tokyo time in case of aggravating the BOJ and if it’s to fall again, then it will probably do so during London trade when the BOJ is gone home.
EUR/USD is steady around 1.4000. Bids are now noted around 1.3970 and I would not be surprised to see another short-covering spike during London trade, perhaps to 1.4150ish. Even if that occurs, I still prefer the sell rally strategy though getting the timing right will be crucial.
