By Stuart McPhee
The AUD/USD has resumed its downward decline after rallying back up towards 0.9160 over the last couple of days by returning back down towards 0.91. Last week wasn't so good as it continued its demise moving to another new low, this time almost reaching 0.9050 before rallying higher to finish out the week. After all of its steady good work a few weeks ago in the middle of November which saw the AUD/USD steadily move higher from support at 0.93 back up to a one week high near 0.9450, the AUD/USD has since returned all of those gains and some moving down to the three month low. After settling around the 0.95 level for over a week earlier last month, the AUD/USD started to drift lower back towards the support at 0.93.
Throughout most of October, the AUD/USD enjoyed a solid and steady move higher from the support level at 0.93 up to the resistance level at 0.95 and beyond to a 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 downtrend 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 placing upward buying pressure on the resistance level at 0.93. 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 downtrend with lower peaks and lower troughs, as it has moved from near 1.06 down to near 0.90 in that time.
It was a busy start to the week for Australian releases. Building Approvals, a key event, is known for its sharp fluctuations. After a huge gain of 14.4% in October, the indicator tumbled, posting a decline of 1.8% in November. However, the markets were braced for a much sharper decline, with the estimate standing at -4.3%. Meanwhile, Company Operating Profits jumped 3.9% in Q3, its best result since 2011. The reading easily beat the estimate of 1.1%. On Tuesday, the RBA will announce its new interest rate. The markets are expecting the rate to remain at 2.50%, but the Bank has surprised the markets in the past and a rate reduction of 0.25% remains a slight possibility.
(Daily chart / 4 hourly chart below)
AUD/USD December 3 at 02:00 GMT 0.9093 H: 0.9168 L: 0.9085
During the early hours of the Asian trading session on Tuesday, the AUD/USD is trying to stay up above the 0.91 level after falling sharply in the last couple of hours. Despite its strong recovery in September, the Australian dollar has been in a free-fall for a lot of this year. Current range: trading near the support at 0.91 around 0.9095.
Further levels in both directions:
• Below: 0.9100.
• Above: 0.9500, 0.9550 and 0.9700.
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 closes in on 70% as the Australian dollar continues to fall below the 0.92 level. The trader sentiment remains in favour of long positions.
- 00:01 UK BRC Retail Sales Monitor (Nov)
- 00:30 AU Net Exports of GDP (Q3)
- 00:30 AU Current Account (Q3)
- 00:30 AU Retail trade (Oct)
- 00:30 AU RBA - Overnight Rate (Dec)
- 09:30 UK BoE publishes Record of Financial Policy Committee
- 09:30 UK CIPS/Markit Construction PMI (Nov)
- 10:00 EU PPI (Oct)
- 15:00 US IBD Consumer Optimism (Dec)
- 22:00 US Vehicle Sales (Nov)
*All release times are GMT