The AUD/USD has experienced its worst week in a long time which has seen it continue to move to new lows below 0.99, from highs above 1.0250. 24 hours ago it did halt the slide a little as it consolidated and traded within a narrow range roughly between 0.9940 and 0.9960 however it has since moved to new 11 month lows below 0.99. 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. 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.
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. All of this just gave way last week as the AUD/USD was heavily sold down, and now the 1.02 level is poised to provide resistance and thwart attempts to push higher, although it seems distance away presently.
Over the course of the last month, the Australian dollar has fallen very sharply from near 1.06 to its lows around 0.9880, 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. A couple of months ago, it did well to push back up off the support level at 1.02 and start the move that it was enjoying getting close to 1.06.
AUD/USD lost more ground on Tuesday after the Australian annual budget pointed to a record deficit. The slumping Australian dollar got no help from the release of the Australian budget earlier on Tuesday. The government, which faces elections later this year, shied away from deep 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.
AUD/USD May 15 at 02:00 GMT 0.9911 H: 1.0003 L: 0.9877
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During the early hours of the Asian trading session on Wednesday, the AUD/USD is rallying a little to back above 0.9900 after having recently dropped back down to 0.9880. 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 around 0.9940. In moving through to 1.0580 only a few weeks ago, it moved to its highest level since January. Current range: trading right around 0.9960.
Further levels in both directions:
• Below: 0.9880.
• 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 below parity. The trader sentiment remains strongly in favour of long positions.
Economic Releases
- 01:30 AU New motor vehicle sales (Apr)
- 01:30 AU Wage Price Index (WPI) (Q1)
- 05:00 JP Consumer Confidence (Apr)
- 08:30 UK Average Earnings (incl. bonus) (Mar)
- 08:30 UK Claimant Count Change (Apr)
- 08:30 UK Claimant Count Rate (Apr)
- 08:30 UK ILO Unemployment Rate (Mar)
- 09:00 EU GDP (1st Est.) (Q1)
- 09:30 UK BoE Releases Quarterly Inflation Report
- 12:30 CA Manufacturing sales (Mar)
- 12:30 US Empire State Survey (May)
- 12:30 US PPI (Apr)
- 13:00 US Net Long-term TICS Flows (Mar)
- 13:15 US Capacity utilisation (Apr)
- 13:15 US Industrial production (Apr)
- 14:00 US NAHB Builders survey (May)