AUD/USD - In Midst Of Large Movements, Remains Steady Around 0.9340

 |  Includes: CROC, FXA, GDAY
by: Dean Popplewell

By Stuart McPhee

AUD/USD for Friday, September 5, 2014

The Australian dollar has shown some signs of life in the last few days dropping sharply down through 0.93 before surging higher again. In more recent hours it has moved higher towards 0.94 before settling again around 0.9340 in midst of all the volatility with other currencies presently. It enjoyed a solid week last week moving up from below 0.9300 to a three week high around 0.9370 before easing a little lower to finish the week. It started this new week in similar fashion easing lower before falling sharply a couple of days ago. For the best part of the last few 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. A couple of weeks ago it fell lower to below the 0.93 level level and down towards a two month low near 0.9220, before rallying well to return to the 0.93 level. Throughout July it generally slid lower from close to 0.95 down to its present trading levels around 0.93. 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.

Australian retail sales rose for a second month in July as consumers rediscovered department stores while dining out more, a promising start for both consumption and economic growth in the third quarter. Thursday's figures from the Australian Bureau of Statistics showed retail sales rose 0.4 percent in July to a record A$23.3 billion ($21.8 billion). That built on a 0.6 percent increase in June and marked the best two months so far this year. That was a welcome step-up from the previous few months when consumer caution over an unpopular government budget combined with mild autumn weather to knock sales flat. The improvement is important as the A$270 billion retail sector accounts for 17 percent of Australia's A$1.6 trillion in annual gross domestic product (GDP) and is the second-biggest employer, providing 10 percent of all jobs. It suggests household spending started the current quarter on firmer footing and augured well for faster economic growth. Data out on Wednesday showed the economy expanded by a moderate 0.5 percent in the second quarter, though growth for the year was still a solid 3.1 percent. "A better start to Q3 is appearing from the likes of business and consumer confidence, hints of better consumer spending and a solid pipeline of dwelling investment activity ahead," said David de Garis, a senior economist at National Australia Bank.

(Daily chart / 4 hourly chart below)

AUD/USD September 4 at 23:55 GMT 0.9340 H: 0.9392 L: 0.9330

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9260 0.9220 - 0.9425 0.9500 -
Click to enlarge

During the early hours of the Asian trading session on Friday, the AUD/USD is just easing a little lower after surging higher up towards 0.94 in recent hours. 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 0.9340.

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

Economic Releases

  • 05:00 JP Leading indicator (Prelim.) (Jul)
  • 09:00 EU GDP (2nd Est.) (Q2)
  • 12:30 CA Labour Productivity (Q2)
  • 12:30 CA Unemployment (Aug)
  • 12:30 US Non-farm & Private Payrolls (Aug)
  • 12:30 US Unemployment (Aug)
  • 14:00 CA Ivey PMI (Aug)
  • JP BoJ Publication of Monthly Report

* All release times are GMT