AUD/USD for Wednesday, December 17, 2014
The Australian dollar has a experienced a bad last month moving from resistance around 0.88 down to multi year lows right on 0.8200 in the last couple of days. Over the last week the Australian dollar has been able to halt the strong decline a little allowing it to consolidate and establish a narrow range between 0.8200 and 0.8350. It is presently receiving some much needed support around 0.8200 as it appears to have its eyes firmly fixed on the 0.80 level. A few weeks ago it enjoyed some temporary support from 0.85, however this eventually gave way to overwhelming supply. To start that week it rallied back above 0.8650 again before falling lower throughout the rest of the week. In the week prior the Australian dollar was able to rally higher and bounce off multi year lows around 0.8550 and in doing so move back within the previously well established trading range between 0.8650 and 0.88 however it all seems some distance away now.
For a couple of months from September through to November, the Australian dollar did well to stop the bleeding and trade within a range between 0.8650 and 0.88 after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650. Back at the beginning of September the Australian dollar showed some positive signs as it surged higher again bouncing off support below 0.93 and reaching a new four week high around 0.94 however that all now seems a distant memory. The Australian dollar reached a three week high just shy of 0.9480 at the end of July after it enjoyed a solid period which saw it surge higher through the resistance level at 0.9425 to the three week around 0.9480, before easing back towards that level. The Australian dollar enjoyed a solid surge higher reaching a new eight month high above 0.95 at the end of June, only to return most of its gains in very quick time to finish out that week. Since the middle of June the Australian dollar has made repeated attempts to break through the resistance level around 0.9425, however despite its best efforts it was rejected every time as the key level continued to stand tall, even though it has allowed the small excursion to above 0.95.
After the Australian dollar had enjoyed a solid surge in the first couple of weeks of June which returned it to the resistance level around 0.9425, it then fell sharply away from this level back to a one week low around 0.9330 before rallying higher yet again. Its recent surge higher to the resistance level around 0.9425 was after spending a couple of weeks at the end of May trading near and finding support at 0.9220. Throughout April and into May the Australian dollar drifted lower from resistance just below 0.95 after reaching a six month high in that area and down to the recent key level at 0.93 before falling lower. During this similar period the 0.93 level has become very significant as it has provided stiff resistance for some time. The Australian dollar appeared to be well settled around 0.93 which has illustrated the strong resurgence it has experienced throughout this year.
The RBA wants more stimulus for the economy, but it wants that to come from a lower Australian dollar rather than lower interest rates. The central bank continued its war of words with the dollar on Tuesday, when the minutes of its board’s December monetary policy meeting were released. “Members (of the board) agreed that further exchange rate depreciation was likely to be needed to achieve balanced growth in the economy,” the minutes said. When the board met on December 2 the Aussie was trading around 85 US cents. That fall of about three per cent is unlikely to change the RBA’s view, especially after the national accounts released the day after the meeting showed the economy’s growth rate over the middle quarters of the year was barely half its long-run average pace. News the following week that unemployment had edged up to a 12-year high would have cemented the RBA’s view that the economy needed more stimulus. But the central bank would much prefer the boost to come from a lower exchange rate rather than even more interest rate cuts. In the minutes, the RBA flagged a “period of stability” in interest rates.
AUD/USD December 16 at 21:40 GMT 0.8216 H: 0.8274 L: 0.8200
AUD/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.8200 | — | — | 0.8650 | 0.8800 | 0.9000 |
During the early hours of the Asian trading session on Wednesday, the AUD/USD is resting on support around 0.8200 after dropping sharply from around 0.8370. Current range: trading right around 0.8220.
Further levels in both directions:
• Below: 0.8200.
• Above: 0.8650, 0.8800, and 0.9000.
OANDA’s Open Position Ratios
(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 settled back to 65% as the Australian dollar has dropped to another multi-year low below near 0.8200 where it is resting on support. The trader sentiment remains in favour of long positions.
Economic Releases
- 21:45 (Tue) NZ GDP (Q3)
- 00:00 AU Internet Skilled Vacancies (Nov)
- 09:30 UK Average Earnings (incl. bonus) (Oct)
- 09:30 UK Claimant Count Change (Nov)
- 09:30 UK Claimant Count Rate (Nov)
- 09:30 UK ILO Unemployment Rate (Oct)
- 09:30 UK BoE MPC minutes released
- 10:00 EU HICP (Nov)
- 10:00 EU Labour Cost Index (Q3)
- 13:30 CA Wholesale Sales (Oct)
- 13:30 US CPI (Nov)
- 19:00 US FOMC – Fed Funds Rate
- 19:00 US Fed Summary of Econmic Projections Released
- 19:30 US Fed’s Yellen holds press conference following FOMC rate decision
- EU ECB Governing Council hold non-rate setting meeting