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Forex: AUD/USD weak below 1.02 post worst China non-manufacturing PMI in 5 months

With Iron ore barely above the $150/tone mark, around 1-month lows, and USD index above the 82.2, 6-month highs, AUD/USD opens the week slightly to the downside, last at 1.0197 bids, off fresh Friday's 4-month lows at 1.0180, on the back of a stronger USD across the board. China non-manufacturing PMI came in during the weekend, showing lowest result in 5 months at 54.5, when previous was 56.2.

“AUD/USD had another run below 1.0200 but more Sovereign buyers and barrier protection ahead of 1.0150 ensured a late bout of short-covering on Friday,” said FXWW founder Sean Lee, adding: “The short-term trend is bearish but selling rallies is preferred to selling weakness in a medium-term range-trading market. The possibility of a short-term double-bottom at 1.0180 might also unnerve the bears,” he suggests.

Immediate support to the downside for AUD/USD lies at mentioned double Friday/Wednesday lows 1.0180, followed by Sept 05/06 lows at 1.0162/3, and Oct 08 lows at 1.0145. To the upside, closest resistance shows at weekly opening price and Friday's session lows 1.0250, followed by Friday's highs at 1.0241, and Feb 25 lows at 1.0250.

Forex: EUR/USD engaged in 1.30 battle

In a weekend where risk headlines were absent, Italy's center-left politician Mr. Bersani - his party obtained the most seats in the lower house - has brought a bit of juicy news by continuing to speculate on forming a grand coalition government with Mr. Berlusconi or Mr. Grillo, a scenario that seems hard to imagine by any means.
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Forex Flash: AUD/USD vulnerable even if RBA holds - NAB

Since the AUD has been trading heavy even with the market scaling back expectations for a rate cut from the RBA tomorrow (just 17%), NAB thinks that anticipated RBA rate inaction tomorrow might produce only a small short-lived rebound in the AUD, before weakness kicks in again, "especially if the RBA makes clear scope to ease policy remains very much in place" NAB said. The bank looks for "AUD/USD to spend more time trading on a 1.01 than 1.02 handle this week."
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