28 Jul 2015
AUD/USD bulls clutching at straws on multi year lows
FXStreet (Guatemala) - AUD/USD is currently trading at 0.7271 with a high of 0.7279 and a low of 0.7264.
AUD/USD continues along the downtrend running through 0.73 but, it maybe heading for a temporary bottom ahead of the psychological 0.70 level.
The Aussie has been shunned for a good while on the basis of the Chinese economy, global risks over the Greek debacle, commodity prices and a lacklustre economy of its own across a number of areas requiring intervention from the RBA and the incremental style of lowering its interest rates.
AUD/USD supported on Q1 GDP
However, there had been signs of improvement in some areas of the economy of late and it looks as though the RBA may be on hold for some months ahead. Business investment was not falling as much as expected on the assessment of the better than expected real Q1 GDP which confirmed a strong and broad based momentum in the economy, especially in the services sector. This sector represents 70% of the economy and is set to become important in the free trade agreements with China and other neighbouring nations in Asia ahead, all in all, the economy was growing in the first quarter in line with the RBA's budget forecast and expectations of 2.5% GDP growth for this financial year. However, Australia is far from being out of the woods yet and some were putting the results in to question, especially in respect to inventories, the value of the aussie and export prices.
AUD/USD could find a bottom on neutral and prolonged period before Fed hike
Meanwhile, markets will focus attention to the Fed again with a neutral RBA for the time being. If the Fed hold off in September, as there is almost zero chance or probability that we will see anything from this FOMC around this week, it may give rise to a sell-off in the greenback and that could be a catastrophe for the bears. There could be a number of reasons that the Fed may need to hold off in September and a weaker greenback would not be unwelcome either.
The longer the Fed needs to delay the more likely we will see a bottom in AUD/USD and the longer the Fed holds off, the more time the RBA has to assess the economy and act accordingly, which may not necessarily be an interest rate cut as their next move could be a shift from neutral to hawkish in quarters ahead. But for the time being, we are data and commodity market dependant.
AUD/USD technically strongly bearish
Technically, the aussie looks in deep trouble. Valeria Bednarik, chief analyst at FXStreet explained that the short term technicals are bearish and also, in the four-hour chart, "The intraday recovery was rejected by a bearish 20 SMA, currently around 0.7315, whilst the technical indicators maintain a weak tone well below their mid-lines, and particularly the RSI indicator heading lower around 37, supporting a new leg lower, particularly on a break below 0.7260, the multi-year low posted last week."
AUD/USD continues along the downtrend running through 0.73 but, it maybe heading for a temporary bottom ahead of the psychological 0.70 level.
The Aussie has been shunned for a good while on the basis of the Chinese economy, global risks over the Greek debacle, commodity prices and a lacklustre economy of its own across a number of areas requiring intervention from the RBA and the incremental style of lowering its interest rates.
AUD/USD supported on Q1 GDP
However, there had been signs of improvement in some areas of the economy of late and it looks as though the RBA may be on hold for some months ahead. Business investment was not falling as much as expected on the assessment of the better than expected real Q1 GDP which confirmed a strong and broad based momentum in the economy, especially in the services sector. This sector represents 70% of the economy and is set to become important in the free trade agreements with China and other neighbouring nations in Asia ahead, all in all, the economy was growing in the first quarter in line with the RBA's budget forecast and expectations of 2.5% GDP growth for this financial year. However, Australia is far from being out of the woods yet and some were putting the results in to question, especially in respect to inventories, the value of the aussie and export prices.
AUD/USD could find a bottom on neutral and prolonged period before Fed hike
Meanwhile, markets will focus attention to the Fed again with a neutral RBA for the time being. If the Fed hold off in September, as there is almost zero chance or probability that we will see anything from this FOMC around this week, it may give rise to a sell-off in the greenback and that could be a catastrophe for the bears. There could be a number of reasons that the Fed may need to hold off in September and a weaker greenback would not be unwelcome either.
The longer the Fed needs to delay the more likely we will see a bottom in AUD/USD and the longer the Fed holds off, the more time the RBA has to assess the economy and act accordingly, which may not necessarily be an interest rate cut as their next move could be a shift from neutral to hawkish in quarters ahead. But for the time being, we are data and commodity market dependant.
AUD/USD technically strongly bearish
Technically, the aussie looks in deep trouble. Valeria Bednarik, chief analyst at FXStreet explained that the short term technicals are bearish and also, in the four-hour chart, "The intraday recovery was rejected by a bearish 20 SMA, currently around 0.7315, whilst the technical indicators maintain a weak tone well below their mid-lines, and particularly the RSI indicator heading lower around 37, supporting a new leg lower, particularly on a break below 0.7260, the multi-year low posted last week."