AUD/USD – Trying to Hang on to 0.83

AUD/USD for Tuesday, December 9, 2014

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 0.8270 before climbing back to 0.83.  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.

Employer demand for more staff is getting stronger, with the number of Australian job advertisements up for the sixth consecutive month.   Job ads on the internet and in newspapers rose 0.7 per cent in November and were up 8.9 per cent for the year, figures from ANZ show.  ANZ chief economist Warren Hogan said that employment growth is gradually improving and the unemployment rate is stabilising.  “Our broad assessment is that labour market conditions have improved but growth headwinds over the next few years will likely limit the prospects for any material improvement,” he said.  Mr Hogan expects economic growth to stay moderate in 2015, which will prevent employment growth from gaining momentum.  Gross domestic product (GDP) figures released last week, showed economic growth in the September quarter was only 0.3 per cent, for an annual rate of 2.7 per cent.  “While activity in the non-mining sectors of the Australian economy is slowly improving, growth overall looks set to remain moderate for some time,” Mr Hogan said.  “Weaker commodity prices are likely to put further pressure on government finances and further constrain the ability for businesses to increase wages; another reason to believe a continuation of soft wages growth ahead seems likely.”

(Daily chart / 4 hourly chart below)

AUD/USD December 8 at 21:50 GMT   0.8291   H: 0.8326   L: 0.8260

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 Tuesday, the AUD/USD is trading in a narrow range between 0.8290 and 0.8310 after finishing last week lower down near 0.8320. Current range: trading right below 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

23:30 (Mon) AU Westpac Consumer Confidence (Dec)

23:50 (Mon) JP CGPI (Nov)

00:30 AU NAB Business Conditions & Confidence (Nov)

07:00 EU EU Finance Ministers Hold Meeting in Brussels

09:30 UK Industrial & Manufacturing Production (Oct)

15:00 UK NIESR GDP Est. (Nov)

15:00 US IBD Consumer Optimism (Dec)

15:00 US Wholesale Inventories (Oct)

* 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.