AUD/USD for Friday, October 10, 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. 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 0.8900 before recently falling sharply below 0.88 again. 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.
Australia’s regulators are keeping a close eye on bank lending for investment properties as risks are building in the sector, a top central bank official said on Thursday. The RBA head of financial stability, Luci Ellis, said risks were mainly growing in Sydney and Melbourne, with almost half of all new financing for investors rather than owner-occupiers. “Obviously that can’t continue forever,” Ellis told a conference on dysfunction in capital markets. “We obviously need to keep a close eye on market developments, including lending standards,” she added. “Banks and other lenders need to consider the risks they are taking on, not just from individual loans, but from the collective effects of lending decisions on the system as a whole.” The Australian Prudential Regulation Authority, which oversees the banks, is consulting with the RBA on whether it should adopt macroprudential rules aimed to limit the build up of leverage and risk-taking in the banking system as a whole, rather than just at individual banks. “In doing so, it will balance the advantages and disadvantages in the context of financial system stability, safety, and efficiency, and it will consider how those measures can best be targeted,” said Ellis.
(Daily chart / 4 hourly chart below)
AUD/USD October 10 at 02:05 GMT 0.8759 H: 0.8752 L: 0.8747
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 Friday, the AUD/USD is continuing to ease below the key 0.88 level after recently falling sharply from resistance at 0.89. 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 0.8760.
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 above 65% as the Australian dollar has eased back through 0.8800 again. The trader sentiment remains in favour of long positions.
Economic Releases
00:30 AU Housing/Lending Finance (Aug)
05:00 JP Consumer Confidence (Sep)
08:30 UK Construction Output (sa) (Aug)
08:30 UK Trade Balance (Non-EU) (Aug)
08:30 UK Visible Trade Balance (World) (Aug)
12:30 CA Unemployment (Sep)
12:30 US Import Price Index (Sep)
18:00 US Budget (Sep)
JP BoJ release minutes
US World Bank & International Monetary Fund Annual Meeting (to 12th)
WLD OPEC Monthly Oil Market Report
* 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.
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