AUD/USD for Thursday, November 7, 2013
The AUD/USD has ground to a halt over the last week after its strong fall from above 0.97 a couple of weeks ago, which now sees it trading just above the 0.95 level. This level has reinforced itself as one of significance over this time and its recent fall has seen it trade to a three week low near 0.9420. A few weeks ago it experienced a rollercoaster ride which saw it surge higher to reach a new 4 1/2 month high above 0.9750 before collapsing back to near 0.9600 within quite time. Throughout most of October the AUD/USD enjoyed a solid and steady move higher from the support level at 0.93 up to the present resistance level at 0.95 and beyond to the high around 0.9760. Throughout the first half of September the AUD/USD enjoyed a solid run which was punctuated by a strong surge higher sending it to a then three month high just above 0.95. A couple of months ago the AUD/USD had been trying valiantly to stay above the support level at 0.89 as all week it placed downward pressure but was unable to sustain any break lower. At the beginning of August it moved very well from three year lows to move back above the key level of 90 cents and beyond to a two week high just above 0.92 to finish out that week.
At the end of July the AUD/USD fell very strongly and appeared to resume the medium term down trend as it moved to a new three year low near 0.8850 but it reversed very well and looked poised to continue back towards the longer term resistance level at 0.93. For the most part of the last week, it moved very little and was quite subdued staying above the support level at 0.94. Throughout July the AUD/USD placed constant pressure on the 0.93 level again as it continued to place buying pressure on that level however the resistance there was able to stand firm. It was during this time it did very well to maintain its price level well above 0.92 as place upward buying pressure on the resistance level at 0.93. Over the course of the last couple of months the 0.93 level has provided reasonable resistance to any movement higher and now that this level has been broken, it is providing a measure of support. Throughout July, the AUD/USD spent most of its time trading between 0.90 and 0.93 threatening to break through either level at multiple stages. The 0.9150 level also became a key level during that time providing both some resistance and more recently support, and this was called upon again a few weeks ago providing some much needed support however it was completely ignored a couple of weeks ago as the AUD/USD fell heavily through it.
It was only a few months ago that many were waiting for the AUD/USD to break below the 90 cents level and then it would have been a matter of how far can it drop. It had continued to drift lower and move towards the 90 cents level, a level not seen for three years. Considering the speed of its decline throughout several months this year, the last couple of months has seen a significant slowing down and almost some consolidation as it has rested well on the support at 0.90 and now made its way back to 0.95. Throughout April to August, the AUD/USD established a strong medium term down trend with lower peaks and lower troughs, as it has moved from near 1.06 down to near 0.90 in that time. Up until mid April, the Australian dollar was enjoying its best move higher since October and November last year. After making a solid run higher in the middle of June back towards the key level of 0.97, the AUD/USD has since continued its strong and steady decline moving to below 0.90 and levels not seen since near the middle of 2010.
There were no surprises from the RBA, which held the course and kept the benchmark interest rate at 2.50%. In the Bank's Rate Statement, RBA head Glenn Stevens reiterated his concern about the value of the Australian dollar. Stevens stated that the Aussie was "uncomfortably high" and that "a lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy". The RBA has stated this sentiment on numerous occasions (although in this instance Stevens employed particularly strong language), but is clearly reluctant to lower interest rates in order to push down the value of the Australian dollar. One possible explanation is that inflation in Australia came in at 2.2% in Q3, and the RBA does not want to take any steps which could raise inflation, such as lowering interest rates.
AUD/USD Daily Chart" title="AUD/USD Daily Chart" height="229" width="550">
AUD/USD 4 Hourly Chart" title="AUD/USD 4 Hourly Chart" height="229" width="550">
AUD/USD November 7 at 00:20 GMT 0.9522 H: 0.9543 L: 0.9505
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During the early hours of the Asian trading session on Thursday, the AUD/USD is trading in a narrow range around 0.9525 after having edged higher from below 0.95 over the last 24 hours. Despite its strong recovery the last few months, the Australian dollar has been in a free-fall for a lot of this year. In moving through to 1.0580 only a few months ago, it moved to its highest level since January. Current range: trading right on 0.9525.
Further levels in both directions:
• Below: 0.9450, 0.9400 and 0.9300.
• Above: 0.9550.
AUD/USD Open Position Ratios" title="AUD/USD Open Position Ratios" height="229" width="550">
(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The long position ratio for the AUD/USD has moved back sharply above 60% as the Australian dollar has fallen back towards 0.9500. The trader sentiment remains in favour of long positions.
Economic Releases
- 00:30 AU Employment (Oct)
- 00:30 AU Unemployment (Oct)
- 05:00 JP Leading indicator (Prelim.) (Sep)
- 12:00 UK BoE MPC - APF Total (Nov)
- 12:00 UK BoE MPC - Base Rate (Nov)
- 12:45 EU ECB - Interest Rate (Nov)
- 13:30 EU ECB President Draghi gives press conference following interest rate announcement
- 13:30 US Core PCE Price Index (1st Est.) (Q3)
- 13:30 US GDP Annualised (1st Est.) (Q3)
- 13:30 US GDP Price Index (1st Est.) (Q3)
- 13:30 US Initial Claims (01/11/2013)
- 20:00 US Consumer Credit (Sep)