AUD/USD news - page 13
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RBA to cut rates by a further 50 basis points
The Australian dollar came under fire last week, hitting a new 6 year low as the US economy gathers momentum and a speech by Reserve Bank of Australia Assistant Governor Christopher Kent, who noted that the Aussie currency was still relatively high in light of the economic situation in Australia.
The Australian dollar briefly hit US75.58c, its lowest level since 2009 with further falls expected in the coming months as pressure grows on the RBA to further cut interest rates in order to kick start the flagging economy.
Mr Kent noted that earlier, the Australian dollar remained relatively high even though some sectors of the economy were contracting with the local currency failing to follow suit causing the economy to go out of whack.
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“The earlier substantial appreciation of the Australian dollar in response to very high prices for our commodity exports was a signal for labour and capital to move into the resources sector. But for a time, the Australian dollar stayed high even after mining investment and commodity prices began to turn down. That meant that it was not playing the usual role of helping to rebalance growth towards other parts of the economy”. he said
He also noted that the recent depreciation of the Australian dollar was starting to have an effect as more and more Australians kept their money at home, as the prices for locally made goods drop and exports become considerably cheaper making Australia competitive on the world stage.
“Australians and foreigners will direct more of their spending to Australian produced goods and services (such as tourism and education) as they become relatively cheaper compared with the alternatives available offshore. Along the same lines, the depreciation has lowered the level of Australian wages when measured in foreign currency terms; since April 2013, they are 30 per cent lower in US dollar terms”. he also noted
On a final note, he mentioned that although the RBA was pleased with the recent drop the currency still has further to fall,
“While the depreciation seen to date will be helpful, our assessment is that our exchange rate remains relatively high given the state of our overall economy”. he said.
Stephen Miller, the Sydney-based head of Australian fixed income at BlackRock is one of the more bearish analysts towards the Aussie dollar and noted that he expects the currency to fall to US70c in the second half of the year, as the RBA is forced to slash interest rates by another 50 basis points to a record low of 1.75% to boost growth.
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AUD/USD slips lower, Fed statement on tap
The Australian dollar edged lower against its U.S. counterpart on Wednesday, as sentiment on the greenback improved ahead of the Federal Reserve's policy statement due later in the day.
AUD/USD hit 0.7602 during late Asian trade, the session low; the pair subsequently consolidated at 0.7612, slipping 0.07%.
The pair was likely to find support at 0.7558, the low of March 11 and resistance at 0.7730, the high of March 12.
Market participants were eyeing Wednesday’s Fed statement to see if it would drop its reference to being patient before raising rates and signal that it is ready to hike rates depending on economic data.
The U.S. Commerce Department reported on Tuesday that housing starts declined by 17.0% last month to hit 897,000 units from January’s total of 1.081 million units, worse than expectations for a decline of 2.4% to 1.049 million.
The report also showed that the number of building permits issued last month increased by 3.0% to 1.092 million units from January’s total of 1.060 million. Analysts expected building permits to fall by 0.5% to 1.065 million units in February.
The Australian dollar had found some support on Tuesday after the minutes of the Reserve Bank of Australia's latest meeting showed that the bank seees an advantage in waiting for more economic data before lowering interest rates further.
The Aussie was also lower against the euro, with EUR/AUD adding 0.15% to 1.3930.
AUD/USD forecast for the week of March 23, 2015
The AUD/USD pair rose during the course of the week, breaking above the top of the hammer from the previous week. Ultimately, we still look at this as a market that should continue to consolidate and perhaps selloff after short-term rallies. We are still very negative on the Australian dollar, and recognize that the 0.80 level above should continue to be a bit of a ceiling in this market so therefore we have no interest whatsoever in buying and believe that sooner or later we will get a resistant candle that we can continue to sell.
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AUD/USD: Aussie Strikes Fresh 1-Month High in US Session
The Australian dollar hiked above the $0.78 handle, reaching a fresh one-month high against the greenback during the US session on Monday, with CPI data eagerly awaited from the US on Tuesday, especially given last week's dovish FOMC minutes, which showed that officials will monitor the latest economic data before deciding on a rate hike.
The aussie was still up 1.28% at $0.7871, its highest level since February 26 and hiking over 100 pips from its daily low at $0.7762.
Market strategist Stan Shamu of IG said on Monday that the dominant theme has been centered on forex moves with the US dollar remaining front and center, "There has been renewed greenback weakness with focus now switching to fedspeak after last week’s FOMC meeting."
The Australian dollar will also be susceptible to the Chinese HSCB manufacturing PMI, which is due on Tuesday and is expected to tick down to 50.4 points in March, after 50.7 previously.
For the upcoming February CPI report from the US, economists are projecting an increase of 0.2% from a month ago, which would then leave the year-over-year change at negative 0.1%. In January, the prices fell 0.7% and the inflation rate turned negative for the first time since October 2009.
The core data, which excludes volatile food and energy prices to show the underlying trend, should see a 0.1% monthly gain that would result in a 1.7% year-over-year print.
Technical analysis
Like most of the US dollar majors, the same story is happening with the aussie - a sharp spike, replaced by a sell off and now once again a gradual uptrend towards the previous high at $0.7850. Charts are very ugly and unpredictable, but so far have respected well defined areas of support and resistance.
In a recent example of AUD/USD and its short-term outlook on intraday charts, the aussie is finding a resistance slightly below a recent swing high of $0.7850 while support lies at $0.76.
Long-term charts could start to form a base and are showing early signs of a possible bottoming pattern, although it is still very early to call it and taking any longs could be risky.
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AUD/USD forecast for the week of March 30, 2015
The AUD/USD pair initially tried to rally during the course of the week, but ran into a significant amount of resistance at the 0.80 level, so we ended up falling back down to form a shooting star. The shooting star signifies that the Australian dollar may continue to go lower, ultimately breaking below the 0.75 level as we should continue to go down to the 0.70 level. We have absolutely no interest in buying this market right now, as there is a significant amount of resistance above the 0.80 level as well, going all the way to the 0.82 handle.
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AUD/USD weekly outlook: March 30 - April 3
The Australian dollar fell almost 1% against its U.S. counterpart on Friday, as traders digested the latest spate of U.S. economic data in their quest to gauge the timing of a future rate hike.
AUD/USD hit an intraday low of 0.7746, the weakest level since March 20, before settling at 0.7756 by close of trade, down 0.93%. For the week, the pair declined 0.28%.
The Commerce Department reported Friday that the U.S. economy expanded at an annual rate of 2.2% in the fourth quarter, unchanged from the preliminary estimate and below economists’ forecasts for an upward revision to 2.4%.
Another report showed that the final reading of the University of Michigan’s consumer sentiment index ticked down to 93.0 this month from a final reading of 95.4 in February.
Meanwhile, Federal Reserve Chair Janet Yellen struck a cautious note on interest rates on Friday.
In a speech, the Fed chief said a rate hike may be warranted later this year, but added that weakening inflation pressures could force the Fed to delay.
The speech echoed the Fed’s latest policy statement, released on March 18, which indicated that it may raise interest rates more gradually than markets had expected.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up 0.1% to 97.65 on Friday. For the week, the index lost 0.66%, the second consecutive weekly decline.
Despite recent losses, the greenback looks likely to continue to strengthen, with the Fed still expected to raise interest rates ahead of other central banks.
In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.
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AUD/USD: H&S Confirmed
As a new week commences in Asia, we bring analysis from SocGen regarding two Asia Pacific pairs.
AUD/USD and USD/JPY are trading in interesting patterns.
Here is their view :
AUD/USD confirmed a head-and-shoulder pattern last year and is extending the downtrend, notes SocGen.
“The monthly RSI has broken below a multi-year trend line support, suggesting continued weakness,” SocGen adds.
“In the short term though, the daily RSI has broken above a multi-month trend line resistance, giving credence to a price break. Thus, a recovery towards 0.8020, the 23.6% retracement from last July, is possible. However, such a rebound is likely corrective in nature, and AUD/USD should eventually drift towards the channel bottom at 0.72,” SocGen projects.
AUD/USD hits new multi-year lows as commodities weigh
The Australian dollar continues its journey south and hit a new low at the 0.75 handle, a level long sought by the RBA. Can it break below this round number?
Not for the first time this week, falls in commodity prices drive the Aussie lower. In addition, a new factor emerged: talk of a credit rating downgrade.
Prices of iron ore have extended their falls that began a long time ago. Worries about Chinese demand, as reflected in the independent HSBC manufacturing PMI, have added fuel to the fire.
Credit rating: JP Morgan warns that the government’s “broken promises” regarding balancing its books could lead to a credit rating cut.
At the same time, the USD is not really shining, especially due to yesterday’s weak data points. And while the greenback is losing some ground against the euro, the pound and the yen, it is moving up against the Aussie.
Another beneficiary of this A$ drop is the kiwi: AUD/NZD is edging a step closer to parity and is also at uncharted territory. If we look at AUD/USD and NZD/USD, we can see that less than 100 pips divide the antipodean currencies against the greenback.
AUD/USD forecast for the week of April 6, 2015
The AUD/USD pair fell during the bulk of the week, but bounced off of the 0.75 level in order to form a hammer. Because of this, we feel that this market will more than likely continue to find the 0.75 level supportive, and with that we feel that this market will consolidate overall. The 0.80 level above should continue to be massively resistive, and with that we think that it’s probably easier to simply sell this market once it gets closer to that level. Ultimately, we do not want to on the Australian dollar below the 0.82 handle.
source
AUD/USD forecast for the week of April 6, 2015
The AUD/USD pair fell during the bulk of the week, but bounced off of the 0.75 level in order to form a hammer. Because of this, we feel that this market will more than likely continue to find the 0.75 level supportive, and with that we feel that this market will consolidate overall. The 0.80 level above should continue to be massively resistive, and with that we think that it’s probably easier to simply sell this market once it gets closer to that level. Ultimately, we do not want to on the Australian dollar below the 0.82 handle.