The AUD/USD is presently consolidating a little around 0.9820 after having recently bounced off the short term support level at 98 cents. It has experienced its worst week in a long time which has seen it continue to move to new lows just below 0.98, from highs not so long ago above 1.0250, although in the last 24 hours it has settled a little and found the support at 98 cents. It has slowed its decline a little however it has in the last 24 hours moved to a new 11 month low below 0.9800. It is likely the 1.00 level may now provide some resistance to higher prices as the AUD/USD tried to claw back some lost ground. At the end of last week, it experienced its largest 24 hour drop in a long time falling strongly down through 1.02 and 1.01 and this week has seen this form continue falling sharply back down below parity.
It had an ordinary week last week as it wasn’t so long ago it was moving up above 1.03. Up until recently, the 1.02 level was one of significance and presented as a long term support level however this has now clearly been broken. It had been showing some bearish signs over the last few weeks as it continued to place selling pressure on the 1.0220 and 1.02 levels and the RBA rate cut earlier last week was the catalyst for a strong push lower, seeing it just fall very heavily as if all support gave way. The last couple of weeks have seen the AUD/USD establish a strong medium term down trend with lower peaks and lower troughs, as it has moved from near 1.04 down to below 1 in that time. In the previous few weeks, the AUD/USD spent most of its time trading between 1.02 and 1.0360. During that time, it moved up to a two week high and back towards 1.04 however it has quickly handed back all of those gains and then some. A couple of times in that same period it received solid support around 1.0220, just above the key long term level at 1.02.
Over the course of the last month, the Australian dollar has fallen very sharply from near 1.06 to its lows just below 0.9800, and in doing so, it also completely ignored any likely support at either 1.04 or 1.0360. In contrast, the week prior, it enjoyed a solid week moving strongly off the key level of 1.0360 towards 1.06 and to its highest levels since January. Up until mid April, the Australian dollar was enjoying its best move higher since October and November last year. Up until earlier this week, the AUD/USD spent the best part of a month trading between the two key levels of 1.0220 and 1.0360 and it will take some effort to return it to this range, with the resistance being offered at the 1.02 level and now likely at 1 too.
The Aussie has had a miserable May, shedding over five cents since the start of the month. Australian New Motor Vehicle Sales looked weak, posting another decline. The slumping Australian dollar got no help from a bleak Australian budget, which was released earlier this week. The government, which faces elections later this year, shied away from unpopular spending cuts but also was forced to revise an earlier forecast of a surplus. In October, the government stated that it would post a modest surplus of A$2.2 billion for 2013/2014, but was forced to revise this to a record deficit of A$19.4 billion. The government blamed the high Australian dollar and weak commodity prices for a dramatic loss in revenue. Meanwhile, both the Standard & Poor’s and Moody rating agencies maintained Australia’s AAA rating, despite the bleak budget. On Wednesday, New Motor Vehicle Sales, an important consumer spending indicator, declined 1.6%, its worst showing since February. 
AUD/USD May 17 at 01:10 GMT 0.9823 H: 0.9886 L: 0.9797
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During the early hours of the Asian trading session on Friday, the AUD/USD is consolidating a little around 0.9820 after having recently bounced off the short term support level at 98 cents. Up until a few weeks ago, the AUD/USD was spending a fair amount of time within a trading range roughly between the key levels of 1.04 and 1.05, however that range seems a distant memory as it has fallen down to a 11 month low near 0.9850. In moving through to 1.0580 only a few weeks ago, it moved to its highest level since January. Current range: trading right around 0.9820.
Further levels in both directions:
• Below: 0.9800.
• Above: 1.0000, 1.0360 and 1.0550.
(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 remains above 70% which is it highest level in a long time, as the Australian dollar has moved back down towards 98 cents. The trader sentiment remains strongly in favour of long positions.
Economic Releases
- 12:30 CA CPI (Apr)
- 12:30 CA Wholesale Sales (Mar)
- 13:55 US Univ of Mich Sent. (Prelim.) (May)
- 14:00 US Leading Indicator (Apr)