AUD/USD – Climbs to Two Week High at 0.8850

AUD/USD for Thursday, October 9, 2014

The last month has not been an enjoyable time for the Australian dollar as it endured a strong decline moving from close to 0.94 down to below 0.8650 and an eight month low in the process. For the last week or so it has taken a breather above 0.87 by rallying back to 0.8750 and more recently steadying around 0.8800 and even though it has met significant resistance at the 0.88 level, it has been able to move through to a two week high above 0.8850.  A few weeks ago the Australian dollar found some much needed support at 0.8950 and rallied back up to just shy of the key 0.90 level before resuming its decline. The long term key level at 0.90 was called upon to desperately provide some much needed support to the Australian dollar, which it did a little a few weeks ago, however it has more recently provided resistance. Several weeks ago the Australian dollar showed some positive signs as it surged higher again bouncing off support below 0.93 and reaching a new four week high around 0.94 however that all now seems a distant memory.

The Australian dollar reached a three week high just shy of 0.9480 at the end of July 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. 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.

The huge rise in Australian employment in August and the spike in the jobless rate a month earlier didn’t actually happen, and the Australian Bureau of Statistics intends to revise most of it away.  The ABS admitted today that there were problems with its July and August employment data.  The number of Australians with jobs rose by a whopping 121,000 in August, the largest monthly increase since records began in 1978, the ABS reported last month.  Forecasts had centred on a gain of only 10,000.  A month earlier the ABS said the unemployment rate jumped to a 12-year high of 6.4 per cent in July, which also surprised economists who were expecting the rate to stay steady at 6 per cent.  Doubts were raised about the veracity of the figures at the time they were both released.  The figures are adjusted to remove the effect of regular seasonal influences on the data.  But the ABS said there was very little evidence of the usual seasonality in the July and August figures, as well as the September figures, which will be released tomorrow.  The ABS said it would revise the figures for these months by replacing the reported seasonally adjusted figures with the unadjusted figures.

(Daily chart / 4 hourly chart below)

AUD/USD October 9 at 02:30 GMT   0.8843   H: 0.8855   L: 0.8793

AUD/USD Technical

S3

S2

S1

R1

R2

R3

0.8700

—

—

0.8800

0.9000

0.9100

During the early hours of the Asian trading session on Thursday, the AUD/USD is trading in a narrow trading range between 0.8840 and 0.8850 after recently surging through the resistance level at 0.88.  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 near 0.95 again earlier this year. Current range: trading right around 0.8790.

Further levels in both directions:

• Below: 0.8700.

• Above: 0.8800, 0.9000, and 0.9100.

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 moved back up towards 65% as the Australian dollar has edged higher through 0.8800 again. The trader sentiment remains in favour of long positions.

Economic Releases

23:50 (Wed) JP METI Tertiary activity index (Aug)

23:50 (Wed) JP Bank Lending Data (Sep)

00:30 AU Unemployment (Sep)

11:00 UK BoE MPC – APF Total (Oct)

11:00 UK BoE MPC – Base Rate

12:30 CA House Price Index (Aug)

12:30 US Initial Claims (04/10/2014)

14:00 US Wholesale Inventories (Aug)

NZ REINZ House Price Index (9th-14th) (Sep)

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.