The AUD has been in an extended season of shorting for most if not all trend traders since 2014. Against the USD from the highs of 0.9500 the pair currently resides around the 0.7360 regions, shaving a hefty ¢20 from the 2014 levels. From an economic standpoint the AUD weakness should have aided its exports and promoted domestic economic growth, but the problem was that Australia is a major exporter of Gold which is directly linked to the States and of course China.
With being the third largest exporter of Gold in the world, the first half of 2015 was not pleasant for the Australian economy. As the USD prospered and traded to new yearly highs, Gold traded lower inevitably dragging down this commodity currency with it. The events of China a few weeks back made the situation worse as the insatiable hunger which investors thought the Asian giant possessed was quickly erased when the stock markets plummeted. Additional reports conveying that China was holding much less Gold than what the world had thought added insult to injury.
Since then most news releases in regards to the AUD have been in the red with bearish sentiment reinforced across the board. On the 4th of August, the RBA released a policy statement which held rates at 2.00% with the current policy unchanged. There was a slight hawkish tone imbued with positivity which pushed the AUD up in value. The AUDUSD moved a solid 100 pips to the upside from the release. This was a moment of courage for the bulls fighting against the tide, but sentiments remain overwhelming bearish, both technically and fundamentally.
As stated earlier, the AUD is correlated to Gold which is inversely correlated to the USD. Every time the USD strengthens, Gold weakens resulting in the AUD weakening. This not only affects the AUDUSD but other AUD paired currencies. The point of this is the importance of the NFP for the States this Friday. Sentiment remains bullish USD further pressuring the AUD but if NFP releases prints out as expected above 220k, the reaction to the AUD will be seriously exponential.
Positive NFP results from this Friday for the States will act as an attribute which will bring the FED closer to hiking interest rates for the USD this September. This surge of strength in the USD will hit Gold hard which in turn may force the RBA to act and cut rates. Interest rate differentials, as well as the divergence between the Fed and RBA, make the AUDUSD a perfect pair to short till the end of 2015.
As for today, there are no releases for the AUD but tomorrow the Employment change and unemployment rate will be printed. The forecast for the employment is 12.5k whilst unemployment 6.1%. As relevant as these releases may be, sentiment for the AUD will remain bearish as long as the USD stays strong, Gold keeps falling and the China slowdown remains in the limelight.
The AUDUSD has been stalling for a while. With the serving of negative releases from China and Australia, the pair still resides around the 0.7380 regions. Three pivotal levels have been formed since July which have both acted as support and resistance. The 0.7500 level, 0.7380 and finally the 0.7250 support. Attributes of a downtrend hold quite well, but this range suggest that the AUDUSD is waiting for the NFP release this Friday. Technically prices reside below the daily 20 SMA, but the MACD trades to the upside. The best strategy for a daily trader may be to simply wait post NFP.
Intraday – On the hourly timeframe things are slowly turning intraday bearish. A solid hourly close and breakdown below the 0.7350 level may open a path to the 0.7300 with a further extension to the daily S1 of 0.7280. An hourly close back above 0.7400 invalidates this intraday bearish outlook.
Weakness from the AUD and strength from the GBP has given the GBPAUD bullish trend traders a very smooth ride since April of 2015. GBPAUD remains bullish fundamentally. The UK economy is doing well, but Australia is under a lot of pressure. The strong NFP on Friday may help the GBPAUD bulls. Technically on the daily timeframe the sharp decline can be seen from the RBA meeting on Tuesday. Prices hit into the monthly S2 before finding minor support. The pair trades above the 20 SMA, but a solid daily close back above the 2.1250 should suggest the resumption of the uptrend. On the daily time frame the key level will be 2.100, as long as bulls can keep above this level, I remain bullish.
Intraday – As of now prices reside marginally trade below the daily pivot. The MACD has crossed to the upside and prices trade above the hourly 20 SMA. An hourly close above 2.213 should open a path to the daily R1 of 2.1345. A move back below 2.100 invalidates this intraday bullish view.
JPY has been passive as of late, so AUD weakness could be seen on the daily timeframe of the pair. Things in Japan have been somewhat quiet. News has been released that the annual 12 meetings have been decreased to 8. Technically AUDJPY bearish daily as long as prices can keep below the 92.50 level. A negative data release tomorrow for the AUD may see this pair trade back below the 90.00
Intraday – AUDJPY remains intraday flat. Prices have been bouncing around the 91.50 regions. Some support has been found above the daily pivot, but a breakout above 92.00 is needed for a bullish intraday view to be established on this pair. The US session may offer more action.
The indecision and weakness of both pairs can be viewed on the daily AUDNZD chart. New Zealand is going through a world of hurt and Australia is also tending to its own issues. Technically this is flat but the release tomorrow and Friday should give more direction.
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