AUD/USD – Rallies Back to 0.83

AUD/USD for Wednesday, December 10, 2014

For a short period of time the Australian dollar has been able to halt the strong decline as it trades around 0.83.  The last few weeks is a period the Australian dollar would rather forget as it has continued to decline and move to multi-year lows near 0.83 to finish last week. It has started this week edging a little lower falling below 0.8230 before climbing back to 0.83 in the last half day.  A couple of weeks ago it enjoyed some temporary support from 0.85, however this eventually gave way to overwhelming supply. To start that week it rallied back above 0.8650 again before falling lower throughout the rest of the week. In the week prior the Australian dollar was able to rally higher and bounce off multi year lows around 0.8550 and in doing so move back within the previously well established trading range between 0.8650 and 0.88. The resistance level at 0.88 has stood tall on numerous occasions over the last few months. During the last couple of months the Australian dollar has done well to stop the bleeding and trade within this range after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650, however this has all been for nothing over the last couple of weeks.

Back at the beginning of September 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.

Australian business confidence and conditions have taken a tumble, as the lower Australian dollar fails to stoke an upturn.  Confidence has now fallen to its lowest level since its bounce just before 2013’s federal election, according to figures from National Australia Bank on Tuesday.  Business activity also went downhill, falling from 13 to five points, NAB’s November business survey showed.  The Australian dollar has fallen more than 10 US cents in the past few months, as low as 82.55 US cents, its lowest point since June 2010.  A lower exchange rate should help some businesses, but the benefits are yet to show, NAB economists said.  “We are yet to see any clear beneficiaries of the Australian dollar depreciation,” they said.  Meanwhile, the lower currency was raising costs for wholesale importers, with wholesalers lagging well behind the rest of the economy, the report said.  The report said sharp falls in commodity prices and subdued consumer demand were weighing on businesses.

(Daily chart / 4 hourly chart below)

AUD/USD December 9 at 21:45 GMT   0.8290   H: 0.8371   L: 0.8224

AUD/USD Technical

S3

S2

S1

R1

R2

R3

0.8300

—

—

0.8650

0.8800

0.9000

During the early hours of the Asian trading session on Wednesday, the AUD/USD is trying to stay above the 0.83 level after spending the last few weeks falling heavily.  Current range: trading right around 0.8290.

Further levels in both directions:

• Below: 0.8300.

• Above: 0.8650, 0.8800, and 0.9000.

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 eased back below 65% as the Australian dollar has dropped to another multi-year low near 0.83. The trader sentiment remains in favour of long positions.

Economic Releases

20:00 (Tue) NZ RBNZ – Cash Rate

23:50 (Tue) JP Key Machinery Orders (Oct)

00:30 AU Housing & Lending Finance (Oct)

05:00 JP Consumer Confidence (Nov)

09:30 UK Trade Balance (Non-EU) (Oct)

09:30 UK Visible Trade Balance (World) (Oct)

19:00 US Budget (Nov)

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.