The technical picture below tells one story but the talk in the market tells another. A large (read very large) Asian quasi-central bank is playing in size. They are selling at .6550 through various outlets but we do not have any confirmation at the moment that they are defending an option. We believe that they are actually a real net buyer of the AUD but that they may well want it to close the month below a certain level.
I also hear from Jamie in NY that there is expected to be extra large demand for the AUD at the London fix later today. Add in to the equation the fact that there are large stops above .6560 and we have a proper riddle to keep our minds busy for a few hours. I’m sure there will be more revelations as the day unfolds but watch out for volatility and my advice would be to buy dips, especially if there is a sharp sell-off on a .6450 break.
