The Australian dollar was the best performer against its American counterpart at the end of European trade with a gain of 0.09% on the session. The demand for the U.S. dollar remained high even though the equity markets gained with the greenback outperforming all major currencies save for the Aussie. US durable goods orders came in better than expected and that news were greeted by investors, who shed their holdings in safe havens and bought higher yielding assets. The positive reading was a gasp of fresh air for traders after the battery of bad economic data, which were released last week. The pending home sales figures also surprised on the upside, which boosted the sentiment among market participants and they moved to riskier assets. That explained why traders bought the high-yielding Australian dollar and sold the yen.
The Aussie started the session at its 25-period moving average and moved higher for the better part of the day, finishing just slightly off the highs of 1.01274. The currency pair pushed above its 50-period moving average on high volume and with a spike, which was indicative of a bull dominated market. Today the currency pair is not performing very well. We opened flat for the session, but then moved lower, marking low after low during the day. We pushed below the 50-period moving average in the early hours of the session and later on penetrated the 25-period moving average, too. For a brief moment we were trading very close to the key from a psychological standpoint level of 1.00, but then we rebounded to move to the current exchange rate of 1.00362. The sell-off in the AUD/USD came after the Housing Industry Association released its new home sales figures. After an increase of 6.9% for the month of May we saw a very modest reading of 0.7% for June. These news prompted investors to shed their holdings in the Aussie, sending the currency pair lower. After the final GDP figures and the unemployment claims for the U.S. economy came in line with expectations, investors continued putting pressure on the Australian dollar ahead of the private sector credit numbers, which are scheduled to be released tomorrow. Technically speaking, the oscillators are all in mid-range with the relative strength index at 44 and the stochastic at 37, but trending lower. The MACD is close to the key 0 level, issuing sell signals, which are yet to be confirmed by other indicators. The 25-period moving average and its 50-period counterpart are in a death cross formation, which might be seen as a signal that bears are starting to dominate the market.
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.