An endorsement of the US bond market by the Chinese government has helped give the greenback a dose of support, pushing prices to their lowest level of the US session on the 1.3150s. Bids are scattered in the 1.3125/50 window but some good-sized stop-loss sell orders are eyed on a 1.3100 break, interbank traders relay.
US equities are back on the plus side but they are not providing EUR/USD nor EUR/JPY any support at the moment. If anything the fact that EUR/USD has been unable to follow stocks higher is helping send EUR/USD intraday longs to the safety of the sidelines keeping the pair offered near-term.
Aussie and CAD are suffering set backs this afternoon. The weathered the first wave of profit-taking well (with the Loonie actually making a new high for the move first thing this morning). The second wave has broken, however, pushing prices to session lows.
A break of 0.7140 will be particularly troublesome for AUD bulls near-term as it will trigger a double top on the hourly charts combined with another rejection of the 200-day moving average at 0.7325.
The Chinese comments are particularly troublesome for AUD in that the market has been buying into the notion that commodities are the new reserve asset of choice for China which clearly benefits Australia. If US Treasuries retain their preeminent position in the reserve mix, it takes some steam out of the Aussie bubble.
