AUD/USD – Key 0.82 Level Stands Up Again

AUD/USD for Thursday, January 22, 2015

After easing back over the last few days, the Australian dollar has fallen sharply in recent hours down through the key 0.82 level and down to a one week low below 0.81.  Over the last week or so the Australian dollar made numerous attempts at the resistance level at 0.82 only to be sent back often before finally finishing last week moving through this key level.  In doing so it was able to reach a one month high near 0.83 before being sold back down again towards 0.82 as the resistance and selling activity above this level kicked in.  For most of the last month over the Christmas / New Year period, the Australian dollar seemed to have been content with trading in a narrow range below the resistance at 0.82, which continues to remain a key level as it is presently provides resistance. It was only a week ago that the Australian dollar drifted lower to another new multi-year low near 0.8030. The Australian dollar experienced a disappointing November and December moving from resistance around 0.88 down to the new lows recently.

For a couple of months from September through to November, the Australian dollar did well to stop the bleeding and trade within a range between 0.8650 and 0.88 after experiencing a sharp decline throughout September which saw it move from close to 0.94 down to below 0.8650. 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.

The RBA should slash interest rates to a fresh record low next month, Westpac’s top economist says, as new figures show consumers remain pessimistic.  Bill Evans says delaying a rate cut until March, as markets are predicting, would be “awkward” for the RBA.  He argues a February cut, following what are expected to be weak December quarter inflation figures, is the better option.  The RBA is due to release its next major economic report card – the quarterly Statement on Monetary Policy – just three days after its February 3 board meeting, giving the central bank a good opportunity to explain its decision and update its inflation forecasts, Mr Evans said.  “The prospect of moving in February should be attractive to the bank,” Mr Evans said on Wednesday.  “Delaying the move to March, which seems to be favoured by markets, makes the Statement much more awkward, particularly if, as we expect, the bank’s inflation forecasts will be lowered significantly.”  Westpac expects the RBA to cut rates twice this year, in February and March, to a new record low of two per cent.

(Daily chart / 4 hourly chart below)

AUD/USD January 21 at 21:55 GMT   0.8092   H: 0.8234   L: 0.8078

AUD/USD Technical

S3

S2

S1

R1

R2

R3

0.8100

—

—

0.8200

0.8650

0.8800

During the early hours of the Asian trading session on Thursday, the AUD/USD is trading in a narrow range around 0.8090 after dropping sharply from back above the key 0.82 level.  Current range: trading right below 0.8100 around 0.8090.

Further levels in both directions:

• Below: 0.8100.

• Above: 0.8200, 0.8650, and 0.8800.

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 well back above 60% as the Australian dollar has dropped sharply back under the resistance level at 0.82.  The trader sentiment remains in favour of long positions.

Economic Releases

09:00 EU Flash Composite PMI (Jan)

09:00 EU Flash Manufacturing PMI (Jan)

09:00 EU Flash Services PMI (Jan)

09:30 UK Public Borrowing (PSNB ex interventions) (Dec)

10:00 EU Flash Consumer Sentiment (Jan)

12:45 EU ECB – Interest Rates

13:30 US Initial Claims (17/01/2014)

14:00 US FHFA House Price Index (Nov)

14:45 US Flash Manufacturing PMI (Jan)

EU ECB’s Draghi gives press conference after interest rate announcement

JP BoJ Publish Monthly Report

* All release times are GMT

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