AUD/USD - Showing Some Life Above 0.93

Includes: CROC, FXA, GDAY
by: Dean Popplewell

By Stuart McPhee

AUD/USD for Thursday, August 28, 2014

The Australian dollar has finally shown some signs of life in the last 24 hours attempting to move higher from the 0.93 level pushing up to a three week high at 0.9350. For the best part of the last couple of weeks the Australian dollar has traded close and around the 0.93 level after spending the preceding few weeks drifting lower from near 0.95. Earlier last week it fell lower to below the 0.93 level level and moved towards the previous key level at 0.9220, before rallying well to return to the 0.93 level. Over the last month or so, it has generally been sliding lower from close to 0.95 down to its present trading levels around 0.93. A few 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. Several 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 a month 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.

Consumer confidence in Australia is back above its long-run average, according to the ANZ-Roy Morgan Weekly Confidence index released yesterday. The index showed a 0.9% increase to 113.5 in the week ending Saturday the 24th of August. This weekly index has been volatile lately as consumers reflect and react to the various budget measures and the to-ing and fro-ing in the Senate. But ANZ sees a solid sign in the sub-indices within the index which suggest that the outlook for retail consumption is improving. "Importantly, the improvement was driven almost entirely by an 11.1% rise in household perceptions about their 'financial situation compared to a year ago', the subindex most closely correlated with consumer demand," the bank said in the press release accompanying the index. "This is now above average levels (since 2001) and is an encouraging sign for consumer spending in coming months." Warren Hogan, ANZ's chief economist, was really positive about the impact of the bounce in the index, saying that: "Signs that consumer confidence is bouncing back, combined with strengthening business surveys, gives us more confidence that the non-mining recovery remains on track."

(Daily chart / 4 hourly chart below)

AUD/USD August 27 at 23:55 GMT 0.9336 H: 0.9351 L: 0.9302

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9260 0.9220 - 0.9425 0.9500 -

During the early hours of the Asian trading session on Thursday, the AUD/USD is trading in a small range right around 0.9335 after spending the last week trading around 0.9300. 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 0.9335.

Further levels in both directions:

• Below: 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 settled around 55% as the Australian dollar has eased back down to the 0.93 level. The trader sentiment remains slightly in favour of long positions.

Economic Releases

  • 23:30 (Wed) UK GfK Consumer Confidence (Aug)
  • 23:30 (Wed) JP CPI Core (Nation) & (Tokyo) (Jul)
  • 23:30 (Wed) JP Real Household Spending (Jul)
  • 23:30 (Wed) JP Unemployment (Jul)
  • 23:50 (Wed) JP Industrial Production (Prelim.) (Jul)
  • 23:50 (Wed) JP Large Retailers Sales (Jul)
  • 23:50 (Wed) JP Retail Sales (Jul)
  • 01:30 AU Capital Expenditure (Q2)
  • 08:00 EU M3 Money Supply (Jul)
  • 09:00 EU Business Climate Index (Aug)
  • 09:00 EU Consumer Sentiment (Aug)
  • 09:00 EU Economic Sentiment (Aug)
  • 09:00 EU Industrial Sentiment (Aug)
  • 12:30 CA Current Account (Q2)
  • 12:30 US Core PCE Price Index (2nd Est.) (Q2)
  • 12:30 US GDP Annualised (2nd Est.) (Q2)
  • 12:30 US GDP Price Index (2nd Est.) (Q2)
  • 12:30 US Initial Claims
  • 14:00 US Pending Home Sales (Jul)
  • EU General Affairs Ministers Hold Meeting in Italy (to 29th)

*All release times are GMT