Good morning everybody.
Stock markets continued their slide overnight with more big falls but, as Jamie pointed out, EUR/JPY should have fallen a lot further and didn’t. This may mean that we are seeing a change in the FX market response to the almost inevitable fall in worldwide equity markets.
We are looking for further USD gains today in Asia but it may be against the JPY and the CHF where the USD starts to play catch up. EUR/USD still looks horrible but while support at 1.2550 remains intact, we may see a 1.2550-1.2720 conslidation range. Cable has fallen a long way from the heady heights of 2.11 but, similar to EUR/JPY, further falls will be much harder fought. Further short term falls in the AUD/USD also look inevitable but we are nearing a major bottom in this pairing and the AUD is extremely oversold against the European currencies in particular so I’d much prefer to buy dips towards .6000 and await the big payday!
Good luck today.
