Archived IMT (2009.08.31)

While the latest wave of risk aversion seems far from over this week (especially ahead of US ISM, ADP and jobs report), markets are likely to witness a bounce in risk appetite (short-covering) into the Asian session, following the 50% retracement in US equity indices off their lows of the day. FX players may consider exploiting the bounce in appetite by favouring AUDUSD into the 0.8470s ahead of the upcoming Reserve Bank of Decision (4:30 am GMT), which will highlight the case against further rate cuts. And since the Aussie has been the clear outperformer over the last 2 days (showing the least declines vs USD relative to other FX), further upside may be expected towards the 0.8470-75 region, but we doubt that any gains are sustained beyond this key resistance level of 0.8480. The aforementioned figures (espclly US jobs) may limit any concerted return to risk-seeking trades. Also, oil's break of the TL support from the Jul 13 low is a reminder of the limitations of any recovery in oil beyond 73.