9 May 2016
AUD/USD: worst of a bad bunch, targeting 100 DMA
AUD/USD is the worst of the bunch on the back of the RBA's downgrading of their inflation outlook by 1% and leaving the idea open that more interest rate cuts could be on the way.
Prior to the recent rate cut from the RBA, the Aussie had enjoyed almost a year of steady rates and a more bullish tone in the Aussie economy than the rest of the world. However, sentiment is turning ahead of the next RBA policy meeting on the June 7. "Of course, AUD promptly weakened over 1% and traded below 0.7400 for the first time since early March. It has now retraced nearly half of this year's rally, with retracement objectives coming in near 0.7330 (50%) and then 0.7210 (62%), " explained analysts at ANZ.
Where now?
For the week ahead, the bad ADP report in the U.S. last week and then a poor nonfarm payrolls headline could trickle through and support the Aussie in an otherwise bearish climate, along with a bullish gold market. We will also be listening closely to the various Fed members due to speak this week (Evans, Kashkari, Dudley, Rosengren, George and Williams). Elsewhere, we will look to China with a number of second tier releases; We actually had a mixed bag in the Chinese trade balance over the weekend where, overall, a fall in trade y/y is not favourable, despite strong exports and a surprise surplus.
AUD/USD levels
AUD/USD broke through the 38.2% retracement support at 0.7451 last week and sold-off sharply to its 55-week ma and the 2016 uptrend. "Daily basis, the technical indicators present strong bearish slopes, despite being near oversold levels, whilst the quick sell-off left the 20 SMA delayed, but bearish, far above the current level, in the 0.7650 region," explained Valeria Bednarik, chief analyst at FXStreet.
In a bearish environment, the 100 day could come under pressure at 0.7333 to give way to way to a robust 200 dma at 0.7259. On the upside, 0.7500 is a psychological level with 0.7722 30th March as next key level.
Prior to the recent rate cut from the RBA, the Aussie had enjoyed almost a year of steady rates and a more bullish tone in the Aussie economy than the rest of the world. However, sentiment is turning ahead of the next RBA policy meeting on the June 7. "Of course, AUD promptly weakened over 1% and traded below 0.7400 for the first time since early March. It has now retraced nearly half of this year's rally, with retracement objectives coming in near 0.7330 (50%) and then 0.7210 (62%), " explained analysts at ANZ.
Where now?
For the week ahead, the bad ADP report in the U.S. last week and then a poor nonfarm payrolls headline could trickle through and support the Aussie in an otherwise bearish climate, along with a bullish gold market. We will also be listening closely to the various Fed members due to speak this week (Evans, Kashkari, Dudley, Rosengren, George and Williams). Elsewhere, we will look to China with a number of second tier releases; We actually had a mixed bag in the Chinese trade balance over the weekend where, overall, a fall in trade y/y is not favourable, despite strong exports and a surprise surplus.
AUD/USD levels
AUD/USD broke through the 38.2% retracement support at 0.7451 last week and sold-off sharply to its 55-week ma and the 2016 uptrend. "Daily basis, the technical indicators present strong bearish slopes, despite being near oversold levels, whilst the quick sell-off left the 20 SMA delayed, but bearish, far above the current level, in the 0.7650 region," explained Valeria Bednarik, chief analyst at FXStreet.
In a bearish environment, the 100 day could come under pressure at 0.7333 to give way to way to a robust 200 dma at 0.7259. On the upside, 0.7500 is a psychological level with 0.7722 30th March as next key level.