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By Stuart McPhee

AUD/USD for Tuesday, August 19, 2014

The Australian dollar is trading in a very small trading range right on top of the key level at 0.9300 right around 0.9325 as a result of remaining higher in the last couple of days. A couple of weeks ago the Australian dollar surged higher to a one week high near 0.9375, before easing back and then falling sharply. It has done well of late to cling onto the 0.93 level after its sharp fall which saw it move from above 0.9400 down to a seven week low below 0.9240. A few weeks ago it was easing back below both the 0.9425 and 0.9400 levels with the former providing some resistance. The Australian dollar reached a three week high just shy of 0.9480 several weeks ago 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. The 0.9220 level has repeatedly reinforced its significance as it is again likely to support price should the Australia dollar retreat further.

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. 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.

A deepening gloom across the largest developed economy to escape recession during the global financial crisis is shaping up as one of the toughest challenges yet for Reserve Bank of Australia chief Glenn Stevens. Australia’s misery index — the sum of unemployment and inflation rates — is at 9.0, the highest since 2008, when the collapse of Lehman Brothers Holdings Inc. froze credit markets around the world and triggered the deepest recession in the U.S. since the Great Depression. While policy makers from the U.S. Federal Reserve to the European Central Bank are still pumping stimulus into their economies at least in part to address job-market slack, Australia’s price pressures limit that option for the RBA. The upshot for the nation’s businesses and consumers: little prospect of lower borrowing costs from Stevens, 56.

(Daily chart / 4 hourly chart below)

AUD/USD August 18 at 23:45 GMT 0.9324 H: 0.9326 L: 0.9322

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9300 0.9260 0.9220 0.9425 0.9500

During the early hours of the Asian trading session on Tuesday, the AUD/USD is trading in a very small trading range right above the key 0.93 level after edging higher to finish out last week. 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 0.95 again. Current range: trading right around 0.9325.

Further levels in both directions:

• Below: 0.9300, 0.9260, and 0.9220.

• Above: 0.9425 and 0.9500.

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 eased back towards 50% as the Australian dollar has pushed back up above the 0.93 level. The trader sentiment remains slightly in favour of long positions.

Economic Releases

  • 23:50 (Mon) JP Customs Cleared Trade (Jul)
  • 01:30 AU RBA minutes released
  • 03:00 NZ RBNZ Inflation Expectations (Q3)
  • 05:00 JP Leading indicator (Final) (Jun)
  • 08:00 EU Current Account (Jun)
  • 08:30 UK CPI (Jul)
  • 08:30 UK Input & Output Prices (Jul)
  • 08:30 UK ONS House Prices (Jun)
  • 12:30 US Building Permits (Jul)
  • 12:30 US CPI (Jul)
  • 12:30 US Housing Starts (Jul)

*All release times are GMT

Source: AUD/USD - Continues To Remain Above Key 0.93 Level