The AUD/USD has resumed its strong downward movement again in the last 24 hours which has seen it move to levels not seen since early June last year. It had enjoyed a relatively solid last few days which saw it halt the falls and rally back up towards 0.9850.
Last week it had experienced its worst week in a long time which saw it continue to move to new lows near 0.98, from highs not so long ago above 1.0250, although over the last week it did settle a little and find some support at the long term support level at 97 cents. This has slowed its decline a little however, in the last 24 hours it has fallen heavily again. Should it recover, it is likely the 1.00 level may now provide some resistance to higher prices if the AUD/USD tries to claw back some lost ground.
At the end of the week a couple of weeks ago, it experienced its largest 24 hour drop in a long time falling strongly down through 1.02 and 1.01 and last week saw this form continue falling sharply back down below parity. It has now experienced an ordinary last couple of weeks as it wasn’t so long ago it was moving up above 1.03 and threatening the key level at 1.0360.
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 a couple of weeks ago was the catalyst for a strong push lower, seeing it just fall very heavily as if all support gave way.
The past few 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 near 0.9600, 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 a couple of weeks ago, 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.
AUD/USD continues on its downward journey, as Australia released disappointing consumer confidence numbers on Wednesday. Westpac Consumer Sentiment plunged 7.0%, its second straight sharp drop. This indicates weak consumer confidence in the Australian economy, and a pessimistic consumer can be expected to scale back on purchases, which is bad news for the Australian economy. On Tuesday, the RBA released the minutes of its most recent policy meeting. At that time, the RBA surprised the markets with a rate cut from 3.0% to 2.75%, and the Aussie has been on a sharp downhill ride ever since. The RBA minutes stated that the RBA reduced rates in response to low inflation and a strong Australian dollar, which were hindering economic growth. The central bank also predicted improvement in the economies of Australia’s major trading partners – China, Japan and the US. This is expected to boost Australian exports and help the struggling economy. Meanwhile, the Aussie’s free-fall in recent weeks make another rate cut in the near future less likely.
AUD/USD May 23 at 04:05 GMT 0.9641 H: 0.9825 L: 0.9626
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During the early hours of the Asian trading session on Thursday, the AUD/USD is continuing to fall lower below 97 cents and is showing little signs of slowing down. About a month ago the AUD/USD was spending a fair amount of time trading roughly between 1.02 and 1.0550, however that range seems a distant memory as it has fallen down to a 11 month low below 0.9700 within the last day. In moving through to 1.0580 only a month ago, it moved to its highest level since January. Current range: trading right around 0.9640.
Further levels in both directions:
• Below: 0.9600.
• Above: 0.9850 and 1.0000.
(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 97 cents. The trader sentiment remains strongly in favour of long positions.
Economic Releases
- 07:58 EU Flash Composite PMI (May)
- 07:58 EU Flash Manufacturing PMI (May)
- 07:58 EU Flash Services PMI (May)
- 08:30 UK GDP (2nd Est.) (Q1)
- 08:30 UK Retail Sales (Apr)
- 08:30 UK Index of Services (Mar)
- 12:30 US Initial Claims (17/05/2013)
- 12:58 US Flash Manufacturing PMI (May)
- 13:00 US FHFA House Price Index (Mar)
- 14:00 EU Flash Consumer Sentiment (May)
- 14:00 US New Home Sales (Apr)