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Aussie Falls on Employment Data- Risk Aversion Buoys Yen

Aussie Falls on Employment Data- Risk Aversion Buoys Yen

2011-05-12 15:15:00
Michael Boutros, Technical Strategist
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Daily Winners and Losers

Aussie_Falls_on_Employment_Data-_Risk_Aversion_Buoys_Yen_body_Picture_2.png, Aussie Falls on Employment Data- Risk Aversion Buoys YenAussie_Falls_on_Employment_Data-_Risk_Aversion_Buoys_Yen_body_Picture_3.png, Aussie Falls on Employment Data- Risk Aversion Buoys YenAussie_Falls_on_Employment_Data-_Risk_Aversion_Buoys_Yen_body_Picture_4.png, Aussie Falls on Employment Data- Risk Aversion Buoys Yen

Risk aversion flows continued overnight with the Japanese yen topping the performance charts against the greenback. As global equity markets and commodities sold off, traders continued to reduce exposure and sought haven in the yen, which was the only currency to advance against the dollar overnight. The ascending channel that emerged on the Monday remains intact as the yen approaches the lower bound trend line, currently at 80.80. A likely break below this level sees targets at the 80.50 support level backed by 80.20 and the 80-handle. Topside resistance holds at the 81-figure, followed by 81.20 and 81.40.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

82.07

20-Day SMA

81.45

10-Day SMA

80.75

2011 High

85.51

Aussie_Falls_on_Employment_Data-_Risk_Aversion_Buoys_Yen_body_Picture_5.png, Aussie Falls on Employment Data- Risk Aversion Buoys YenAussie_Falls_on_Employment_Data-_Risk_Aversion_Buoys_Yen_body_Picture_6.png, Aussie Falls on Employment Data- Risk Aversion Buoys Yen

The Australian dollar was the weakest of the majors against the dollar after a disappointing employment report showed the domestic economy shed 22K jobs in April, missing calls for a gain of 17K. The news had traders reducing rate hike expectations with Credit Suisse now factoring only a 16% chance of a hike at the next central bank meeting, while twelve month expectations fell to 32bps. The data, along with plummeting commodity prices continue to weigh on the aussie which broke through the 1.0660 support level early in the Asia Pacific session. The Aussie risks further losses with a break below the 1.0570, with subsequent floors eyed at 1.0545 and the 1.05-handle. Topside resistance holds at 1.0660, followed by 1.0720 and 1.0770.

Key Levels/Indicators

Level/Indicator

Level

50-Day SMA

1.0430

20-Day SMA

1.0740

10-Day SMA

1.0774

2011 High

1.1010

Written by Michael Boutros, Currency Analyst for DailyFX.com

To contact the author of this report, please send inquiries to:mboutros@dailyfx.com

You can also follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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