AUD/USD news - page 24
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AUD/USD Forecast Aug. 10-14
AUD/USD posted its strongest weekly gain since March, jumping 120 points. The pair closed the week at 0.7415. This week’s highlight is NAB Business Confidence. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
In the US, NFP was slightly below expectations, which means the guessing game about the timing of rate hike by the Fed will continue. Australian employment numbers were excellent, helping the Aussie post gains late in the week.
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Important week ahead, prepare for a change in trend soon.
AUD/USD: Aussie Sinks on PBoC Action
The unexpected decision on Tuesday by the People's Bank of China (PBOC) to lower the renminbi rate by the most on record had a negative effect on antipodean currencies.
The move was a 1.9% "one-off deprecation" to make the exchange rate more market oriented, the central bank said. The PBoC sets the exchange rate using the official midpoint, from which trade can move 2% up or down on any given day.
Although the bank argues that this is a "one-off adjustment", the offshore yuan (CNH) is trading at a discount against the CNY, strengthening the notion that there might be further room to depreciate from here. It was a move to make the exchange rate more market oriented, the central bank said.
The aussie fell more than 1% on the news, hitting intra-day low of 0.7304, while it corrected slightly later on, and was seen tradin 0.94% lower at $0.7342.
China remains Australia's biggest trading partner. With the devaluation of the Chinese currency, Chinese companies will have less purchasing power to purchase products from Australia or New Zealand. Markets are also concerned, as they see a warning message in the latest PBOC move, suggesting that the Chinese economy continues to struggle to maintain its desired growth.
From the technical point of view, the Australian dollar has broken its short-term support of $0.7350 confirming short-term weakness. A further fall towards $0.72500 is seen by technical analysts as the next target for the currency pair.
Should the pair swing higher, minor resistance is seen around $0.7380. Only a break above $0.7450 will cancel the bearish short-term trend.
Do Not Buy Aussie Now: Credit Agricole
Keep hands off the Australian dollar at the current levels, Credit Agricole advised its clients on Tuesday, pointing to ongoing weakness in commodity prices and waning appetite for riskier assets.
"..... we advise against buying the currency around the current levels, in particular against the greenback," the bank said in a note.
"Any rise in cross market volatilities should keep the AUD subject to downside risk, in particular if commodity price developments slow further."
'External factors'
The bank noted that the so-called aussie will most likely be driven by external factors, such as development in commodity prices and the upcoming Fed rate hike, which may come as soon as in September. These expectations are set to boost the greenback.
The Australian dollar was traded 1.16% at $0.7324 against its US namesake during Tuesday's early US session, reacting to the shocking decision to depreciate the Chinese yuan.
The comments came after the aussie booked its second straight weekly gain last week, mainly in reaction to the country's central bank's more comfortable stance with respect to the currency. The Reserve Bank of Australia (RBA) only recently refrained from calling the currency overvalued.
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AUD/USD forecast for the week of August 17, 2015
The AUD/USD pair initially fell during the course of the week but found quite a bit of support near the 0.72 level. By doing so, we ended up forming a hammer but quite frankly we have far too much in the way of resistance above to start buying now. With this, we are simply waiting to see that if we get some type of rally in order to start selling again to take advantage of “value” in the US dollar. We have absolutely no interest in buying at the moment and recognize that the pressure is most certainly still to the downside.
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Australia - ANZ Roy Morgan Weekly Consumer Confidence: 113.2 (prior 112.5)
ANZ Roy Morgan Weekly Consumer Confidence for the week ended August 16+0.6% on the week
Highest level in 6 weeks
Comments from ANZ
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Still to come from Oz today ... and much more of a focus ...
Thanks for sharing!
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AUD/USD’s Copper Correlation Could Be Catastrophic
Last week we looked at the weakening correlation between the value of the Canadian dollar and oil prices, noting that, “It seems unlikely that this typically tight correlation has broken on a sustainable basis, so it will be interesting to see whether oil sees a notable bounce next week or whether the loonie depreciates meaningfully to “catch down” with the recent fall in black gold”. While we haven’t seen a resolution to that divergence yet, there is another currency pair/commodity correlation that may come to the fore this week.
The Australian dollar is generally closely correlated with base metals such as iron ore and copper and while the former has managed to stabilize over the last few weeks, copper has continued to tumble. Earlier today, copper dropped below $5,000 per metric ton in London trading. Beyond representing a significant psychological level, this is also the lowest price for the metal since the Great Financial Crisis in 2009. From a fundamental perspective, much of the recent decline can be chalked up to fears about China’s economy, which has recently slowed down to “just” 7.0% growth in the official numbers, though many analysts suspect the economy is actually growing at an even slower rate.
If copper is unable to recover from its big breakdown, it would bode ill for the Australian dollar. Last night’s RBA minutes showed that the central bank is firmly on hold, though it appears that the central bank wouldn’t mind seeing continued depreciation in its currency. To wit, the minutes noted that, "it was likely that financial market volatility would increase and the US dollar could appreciate further, including against the Australian dollar” if and when the Federal Reserve raises interest rates. The minutes also stated that China’s “policy response to the recent volatility in Chinese equity markets had clouded the medium-term economic outlook” for Australia’s economy.
At this point, the key technical level to watch on AUD/USD (left axis) is .7250, which represents previous support from earlier this month and late July. Especially if the price of iron ore starts to edge lower as well, the Aussie could retest or break this key support level later this week. Meanwhile, a recovery in copper may alleviate one bearish catalyst for AUD/USD, but without any bullish fundamental news, the pair could still remain rangebound below .7400-50.
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AUD/USD: Pair Trades Around Daily Lows, Bears Merciless
The US dollar was strengthening against its Australian counterpart and the pair was seen 0.5% lower during US trading hours, changing hands around $0.7330.
Earlier in the session, US building permits for July dipped from a downwardly revised 1,337K to 1,119K, which is a month-to-month drop of 16.3%, while housing starts for July increased to 1,206K from a revised 1,204K seen in June, which represents a 0.2% monthly gain, sharply down from last month's revised 12.3%.
According to the CFTC and Rabobank's research bearish pressure on the AUD stepped up again last week after the CNY devaluation. The previous week following net shorts had decreased following the change in the RBA’s policy statement. USD longs climbed a little higher prompted by the as-expected-but-solid US July labor report. However, as the value of the CNY fell further during the middle of last week, speculation of a September Fed policy move was pared back and this impacted the value of the USD on the spot market.
During the Asian session on Tuesday, the minutes from the latest RBA meeting were published. The impact was muted and short lived and Aussie continued drifting lower.
"Members noted that when the Fed actually delivered its first interest rate increase in nine years, there was likely to be a sizeable market impact notwithstanding how well telegraphed the change in policy had been...It was likely that financial market volatility would increase and the US dollar could appreciate further, including against the Australian dollar," the minutes said.
"In the minutes the RBA acknowledged that “economic activity had generally been more positive over recent months”, and that a “further depreciation of the Australian dollar was expected to impart stimulus to the economy through stronger net exports”. The RBA expects there to be a “sizeable market impact notwithstanding how well telegraphed the change in policy had been” when the Fed begins to raise interest rates," analysts at Bank of Tokyo-Mitsubishi wrote in a note on Tuesday.
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