Over the last couple of weeks, the AUD/USD has shown some positive signs of rallying higher and breaking back through to 0.9850, then towards 0.9800 in the last week. It has been all too little however.
It has now moved through the bottom of the recent trading range and to a new 20 month low below 0.9400. During the last few weeks the Australian dollar established and traded within a range between two key levels at 0.9550 and 0.97, which was able to halt the strong decline it experienced through May. A few weeks ago the 0.97 level provided some support and in recent weeks has provided stiff resistance to any rally efforts, which is why it was significant that the AUD/USD broke through that level a week ago, despite its recent reversal. It had attempted on a few occasions to rally, however the Australian dollar had run into a brick wall of resistance at this level.
About a month ago the AUD/USD experienced its worst week in a long time which saw it continue to move to new lows near 0.98, from highs not so long ago above 1.0250, although it did settle a little and find some support at the long term support level at 97 cents. Although presently appearing unlikely in the short term, should it recover and move back, it is likely the 1.00 level may now provide some resistance to higher prices, as well as the 0.97 level and around 0.9800.
The AUD/USD has now experienced an ordinary last month as it wasn’t so long ago it was moving up above 1.03 and threatening the key level at 1.0360, and before that it was approaching 1.06. Up until earlier in May, the 1.02 level was one of significance and presented as a long term support level, however this has now clearly been broken. It had been showing some bearish tendencies as it continued to place selling pressure on the 1.0220 and 1.02 levels and the RBA rate cut last month was the catalyst for a strong push lower, seeing it just fall very heavily as if all support gave way.
The last couple of months have seen the AUD/USD establish a strong medium term down trend with lower peaks and lower troughs, as it has moved from near 1.06 down to near 0.94 in that time. In doing so, it has completely ignored any likely support at either 1.04 or 1.0360, and more recently the long term support level at 0.97. Up until mid April, the Australian dollar was enjoying its best move higher since October and November last year. Up until a month ago, the AUD/USD spent the best part of a month trading between the two key levels of 1.0220 and 1.0360 and it will take some effort to return it to this range, with the resistance being offered at the 1.02 level and now likely at 1 too.
There was yet another weak Australian release on Thursday, as Trade Balance came up short of expectations. The country posted another surplus, but it was a very modest AUD 0.03B. This fell below the estimate of AUD 0.20 billion. The Aussie continues it free-fall, as the currency has lost almost nine cents since the beginning of May.
Nothing seems to be going right for the Australian dollar. The RBA did not lower rates earlier this week, but the Australian dollar still took a hit, as the RBA left the door open for rate cuts in the near future. The economy churned out more weak numbers this week, as three key events – Retail Sales, GDP and Trade Balance all missed their estimates. There was more bleak news on Thursday, as BlackRock, the world’s largest issuer of exchange traded funds, said that a number of U.S. hedge funds are lining up to short the struggling Australian dollar.
AUD/USD June 10 at 03:15 GMT 0.9442 H: 0.9497 L: 0.9393
During the early hours of the Asian trading session on Monday, the AUD/USD is trying to rally a little and head back higher from the support it is receiving at 94 cents. The Aussie continues it free-fall, as the currency has lost almost nine cents since the beginning of May. Nothing seems to be going right for the Australian dollar. In moving through to 1.0580 only a couple of months ago, it moved to its highest level since January. Current range: trading just above 0.9400 around 0.9440.
Further levels in both directions:
• Below: 0.9400
• Above: 0.9700, 0.9800 and 0.9850
(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 above 75% again as the Australian dollar has fallen ever further to near 94 cents. The trader sentiment remains strongly in favour of long positions.
Economic Releases
- 05:00 JP Consumer Confidence (May)
- 05:00 JP Economy Watchers Survey (May)
- 08:30 EU Sentix Indicator (Jun)