The AUD benefited from a broader risk rally, which seemed mainly spurred by inaction and division with the Federal Reserve and the unwinding of some fairly extreme market positioning.

There hasn't been a material upswing in global economic conditions to justify the recent shift in risk appetite, in fact latest releases on the whole have been disappointing. Consequently we are cynical of the AUD's ability to maintain its current upward momentum. Given the size of the AUD's short build up some further gains are expected in the session ahead. However, once this short squeeze is behind us we expect the AUD to once again come under selling pressure.

Key Themes

1.	The Greenback is broadly on the back foot following the FOMC minutes showing indecision

2.	Commodities and associated currencies rally

3.	Monetary policy stagnation the pre-eminent theme across the major central banks

Monday

ALL IMF Meetings
USD Bank Holiday

Tuesday

JPY Monetary Policy Meeting Minutes
AUD NAB Business Confidence
CNY Trade Balance (46.9B)
JPY Consumer Confidence (41.6)
GBP CPY y/y (0.0%)
EUR German Zew Economic Sentiment (6.8)

Wednesday

AUD Westpac Consumer Sentiment
JPY PPI y/y (-3.9%)
CNY CPI y/y (1.8%)
GBP Unemployment Rate (5.5%)
EUR Industrial Production m/m (-0.4%)
USD PPI m/m (-0.2%)
USD Retail Sales m/m (0.2%)

Thursday

USD Beige Book
AUD MI Inflation Expectations
AUD Employment Change (7.2K)
AUD Unemployment Rate (6.2%)
USD CPI m/m (-0.2%)
USD Empire State Manufacturing Index (-7.3)
USD Philly Fed Manufacturing Index (1.8%)

Friday

NZD CPI q/q (0.2%)
EUR Final CPU y/y (-0.1%)
EUR Trade Balance (22.2B)

Saturday

USD Industrial Production m/m (-0.2%)

AUD/USD

Having broken through the previous high of 0.7280, resistance provided by the overhead trend line now comes into focus. This trend line and the previous lows create fairly formidable resistance zone between 0.7450 and 0.7500, which we expect to be too tough a nut to crack, and levels about 0.7400 are viewed as a great selling opportunity over the medium term. Support is initially found at 0.7200 but ultimately we expect another examination of the lows before the end of the year.

NZD/USD

As warned last week the break higher through the 50 day sma (0.6455) spurred a short squeeze that is currently eroding resistance at the 100 day sma (0.6655). Daily momentum is still quite NZD supportive but further rallies are expected to falter at trendline resistance seen at 0.6770, as last week's sharp move higher is consolidated between 0.6800 and 0.6500. Many weeks (5-6) of trading above 0.6500 would be required to form a convincing base that would signal levels above 0.7000 up to 0.7300 are in the offing.

AUD/JPY

As mentioned in the introduction we are cynical about the sustainability of this recent rally in risk. Few currency pairs are better proxy for risk appetite than AUD/JPY. The pair has broken through the 87.30 resistance exits near current levels, but more importantly around the previous lows at 89.50. A closing move through 86.70 support would suggest that a high is in place.

AUD/EUR

The AUD rallied through the top end of the recent 0.6400-0.6180 trading range to challenge the trend line resistance that stretches back to May and in doing so has turned daily momentum AUD positive. Gains past here will be harder to sustain with levels up to 0.6550 seen as AUD profit-take/shorting opportunities. Medium term momentum has certainly turned neutral but several weeks of trading about 0.6300 will be required before trend changing AUD positive signal is generated. This week, buy AUD dips to 0.6370 and take profit above 0.6500.

AUD/NZD

The bottom range highlighted last week (1.0850) held exactly and a strong close to the week has helped to stabilise short and medium term momentum. Another week has helped to stabilise short and medium term momentum. Another week of trading above 1.0850 and a weekly close above 1.100 would go a long way to indicating the recent AUD long position squeeze is over and higher levels above 1.1350 will be again tested. For the current week still look to play a range of 1.1080 (100 day sma) to 1.0850 from a long AUD bias.

AUD/GBP

We are now approaching the 0.4800 resistance level cited in last week's report, it looks likely it will likely fail to contain the pair and a further rally to the trend line will be required. We expect AUD/GBP to meet heavy selling pressure on approach to 0.4900 to be followed by a more extensive period of range trading. Support remans around 0.4650 and will need to be broken to suggest that a near term top is in the place.

AUD/USD	0.7200	0.7450	Range	Range
NZD/USD	0.6500	0.6770	Range	Range
AUD/EUR	0.6370	0.6550	Range	Range
AUD/GBP	0.4650	0.4900	Topping	Range
AUD/NZD	1.0850	1.1080	Range	Basing
AUD/JPY	86.70	89.00	Topping	Range

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