Commodity FX (CAD AUD NZD NOK)

EUR/AUD Technicals: 38.2% Retracement Complete

This has been an important pair to watch over the last week or so and there might be more to come. If a move is almost vertical in either direction, I find there to be an increased liklihood that the 38.2% retracement will suffice. That level is 1.4870 and that was the overnight low. If a low starts to form near there then I expect another short-covering squeeze towards 1.5600 approximately.

AUD/USD has just made a fresh low for the year at 0.8066 and is now down 200 pips for the day. The pair in line with EUR/USD has shown no inclination to bounce which suggests that selling is consistent whilst buyers are simply not interested. The hourlies technical readings are oversold but everything else points to further downside.
A break of 80 cents looks a no brainer in this environment. The trouble with these markets is that nobody has any idea where the bottom is so they wont step up to the plate this exaggerates moves but that is the market we are in at the moment.

For those expecting the currencies to hit the "teen's" or "below 80" on Aussie with in hours or couple of sessions, let me assert here, risk to downside is limited and capped at 12180 and 8080 on Aussie. We might see one or more further dip as it would give opportunity to buyers in new options. While liquidity continues to reduce on defaults I suspect and have a pretty good guess, that Hedge funds, brokers, and most financials will sell Gold contracts and assets to gain margins, take profits and add liquidity to their portfolios in-order to go back into the market with buy backs, to show profits in their 3Q into 4Q where growth will be reflected back in form.

Dow futures are showing a 260 point loss whilst the S&P is down 33 points. European bourses are also extending their losses the CAC is down nearly 4% whilst both the Dax and FTSE are down over 3%.

Liquidity remains very low Libor still extending ask risk in financial markets remain high. And i stress again this is only a financial problem, do not confuse it as a economic problem. Wall Street brokers will remain busy today, have all their good clients today buying, and I wont be surprised if they get them start buying into Financials again, that might lift confidence for the financials and if they see this they will definitely not take another chance for turn around and will cash their Gold to raise some leverage and continue to gain all time trading contracts. I mean obviously they certainly dont want to wreck a market that's giving great business and all time new records of buyers/sellers. To hold competition within the market is a greater positive for financials, in order to continue making money and keep business alive.

Ashraf

Nice call on the Aussie you got it right again ...

Thanks

1255 GMT [Dow Jones]Treasury is set to announce sizes for next week's new government debt sales at 11 a.m. EDT. Many market participants are expecting another round of cuts in the sizes. Economists at Wrightson ICAP say both the two-year note and the five-year note sales will see their sizes down by $2 bln, to $42bln and $40bln respectively, while the size for the seven-year note supply will be cut by $1bln to $31bln. The total size will be $113bln, down from $118bln last month. The Treasury already cut the three-year and 10-year auction sizes earlier this month as it expects improvement in tax receipts amid a recovering economy.

(min.zeng@dowjones.com)


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@ASHRAF (how do you see the effects of these cut on commodity pair? plz comments!)