AUD/USD for Tuesday, June 3, 2014
After spending the best part of the last couple of weeks trading near and finding support at 0.9220, the Australian Dollar rallied well to finish out last week and move back to the key 0.93 level before easing back to 0.9220 again. This level has reinforced its significance as it is again likely to support price. It was only a few weeks ago that the Australian dollar was placing pressure on the resistance level at 0.94 when it was able to poke through for a short period and reach a four week high in the process. However since that time it has slowly drifted lower and found support again around 0.9220. The Australian dollar did well to finish out a few weeks ago in moving through the resistance level at 0.93 and maintaining the break. Prior to the break through, the Australian dollar had fallen back down below the 0.93 level and settled within a very narrow range just below the level before surging back up.
The last month or so has seen the Australian dollar drift 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. For the best part of February and March the Australian dollar did very little other than continue to trade around the 0.90 level, although at the beginning of March it crept a little lower down to a three week low below 0.89. Towards the end of March however, the Australian dollar surged higher strongly moving to the resistance level at 0.93 before consolidating for a week or so.
For several months either side of the New Year the Australian dollar established and traded within a narrow range roughly between 0.88 and the previous resistance level at 0.90. Back in January the Australian dollar was able to rally higher pushing through the resistance at 0.90 to a one month high near 0.91, however it quickly returned to more familiar territory below the resistance levels at 0.90 and 0.88. After showing some resilience in early December moving to a one week high above 0.9150, the AUD/USD spent the next two weeks turning around sharply and falling heavily down to a then three month low close to 0.88.
A measure of Australian manufacturing activity improved in May although firms continued to complain of challenging conditions in the business sector. The Australian Industry Group’s performance of manufacturing index (PMI) rose 4.4 points to 49.2, just below the 50 level that is supposed to mark the threshold between contraction and expansion. The survey has been persistently weaker than official measures of manufacturing, implying the sector has been deep in recession for almost all of the past five years. The may result marked the seventh consecutive month of contraction. The federal budget had dampened confidence levels and delayed or lowered business commitment to new expenditure, the report said. There was also pressure from the renewed strength in the Australian dollar, which had seen import competition intensify. “The manufacturing sector continues to be buffeted by weak household demand, a lack of business confidence and fierce competition in both domestic and export markets, heightened by the renewed strength in the Australian dollar,” Ai Group chief executive Innes Willox said.
AUD/USD June 2 at 23:20 GMT 0.9240 H: 0.9249 L: 0.9239
During the early hours of the Asian trading session on Tuesday, the AUD/USD is slowly but surely drifting lower and looks likely to head back towards the key 0.9220 level. The Australian dollar was in a free-fall for a lot of last year falling close to 20 cents and it has done very well to recover slightly to well above 0.90 again. Current range: trading right above 0.9220 around 0.9240.
Further levels in both directions:
• Below: 0.9220 and 0.9100.
• Above: 0.9380 and 0.9400.
(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 up towards 60% as the Australian dollar has eased back towards the key 0.9220 level. The trader sentiment remains in favour of long positions.
Economic Releases
- 01:30 AU Current Account (Q1)
- 01:30 AU Net Exports of GDP (Q1)
- 01:30 AU Retail trade (Apr)
- 04:30 AU RBA – Overnight Rate (Jun)
- 06:00 UK Nationwide House Prices (May)
- 08:30 UK CIPS / Markit Construction PMI (May)
- 09:00 EU Flash HICP (May)
- 09:00 EU Unemployment (Apr)
- 14:00 US Factory Orders (Apr)
- 14:00 US IBD Consumer Optimism (Jun)
- US Vehicle Sales (May)