AUD/USD for Wednesday, November 19, 2014
Over the last week or so the Australian dollar has been able to rally higher and bounce off multi year lows around 0.8550 and in doing so has moved back within the previously well established trading range between 0.8650 and 0.88. In the last couple of days, the Australian dollar ran into the resistance level at 0.88 again which stood tall and send prices lower again. A couple of weeks ago it fell sharply from above the resistance level at 0.88 back down to the support level of 0.8650 before crashing further to a new multi-year high near 0.8550. During the last couple of months the Australian dollar has done well to stop the bleeding and trade within this range after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650 and a then eight month low in the process. The resistance level at 0.88 remains a factor and is continuing to place downwards pressure on price, however more recently all eyes have turned on to the support level at 0.8650 to see if the Australian dollar can hold on and stay within reach again.
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.
Reserve Bank of Australia governor Glenn Stevens has indicated interest rates are likely to stay low for years or until non-mining businesses have the courage to invest again. Australian companies were waiting for someone else to act and take risks to grow to provide evidence of demand, when it was up to them to act, Mr Stevens said. As mining investment and income growth falls and household debt and unemployment rises, he suggested there was little danger of the economy overheating to raise rates above the current 2.5 per cent level. “Inflation is well under control and is likely to remain so over the next couple of years,” Mr Stevens told a Committee for Economic Development of Australia dinner. “In such circumstances, monetary policy should be accommodative and, on present indications, is likely to be that way for some time yet.” It was not unusual that stronger growth and confidence was taking a while to rebound after the global financial crisis, but inevitably it would, he said. “With business capital spending, sometimes we find a few years later we look back and it actually was starting a bit earlier than we knew at the time,” Mr Stevens said. “We have to get to the stage where shareholders are not saying to the board ‘just keep giving us dividends and give us the capital back’. People are saying ‘what are you doing to invest our money for the future?’.”
AUD/USD November 18 at 21:30 GMT 0.8726 H: 0.8746 L: 0.8682
AUD/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.8560 | — | — | 0.8800 | 0.9000 | 0.9100 |
During the early hours of the Asian trading session on Friday, the AUD/USD is trading in a very narrow range around 0.8730 after recently running into resistance at 0.88 again. Current range: trading right around 0.8725.
Further levels in both directions:
• Below: 0.8650 and 0.8560.
• Above: 0.8800, 0.9000, and 0.9100.
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 around 60% as the Australian dollar has rallied back into the previous key range above 0.8650. The trader sentiment remains in favour of long positions.
Economic Releases
- 23:50 (Tue) JP Customs Cleared Trade (Oct)
- 00:00 AU Internet Skilled Vacancies (Oct)
- 04:30 JP All Industry activity index (Sep)
- 05:00 JP Leading indicator (Final) (Sep)
- 09:00 EU Current Account (sa) (Sep)
- 09:30 UK BoE MPC minutes released
- 13:30 US Building Permits (Oct)
- 13:30 US Housing Starts (Oct)
- 19:00 US Fed releases minutes from prior (Oct 28-29) FOMC meeting
- EU EBA Management Board Meeting
- EU ECB Governing Council hold non-rate setting meeting