After the choppy week it had, the AUD/USD took some severe hits last Friday when the data for the U.S. labor market has been released. After the report, investors chose to put their money in lower-yielding currencies, shedding their holdings in risky assets such as the Australian dollar. As a result, the Aussie dropped from rates of 1.02917 to rates of 1.2330.
The high-yielder even traded at 1.01756 at one point during the session, but towards the end of the day bulls become active again and pushed the Australian currency to the aforementioned levels. Yesterday, the AUD/USD continued to move lower in the morning part of the session when has been marked a fresh new low of 1.015 for the month. The extended selling came with investors continuing to shy away from risky assets as the data for the Japanese manufacturing sector disappointed. At the same time, the number of jobs advertisements in major daily Australian newspapers and websites declined at a slower pace than in the month before, but that was not sufficient to lift the Aussie higher. The high-yielder managed to pare all of its earlier losses in the afternoon to finish into green territory for the day as sentiment among investors slightly improved after the data for the consumer credit in the USA were released.
The Aussie is having a great day today as it is currently trading above both its 50-period and its 25-period moving averages. The high-yielder did not start the day well as the National Australia Bank released its business confidence number and it came in worse than expected. After the first negative reading of the indicator since November of 2011 was announced for the month of May, we saw another negative reading for the month of June. Not just that, the new number came in worse than the number for May. On the release, the Aussie dipped and tested the lows it marked in the previous session, but failed to push below them. The bulls took the initiative from the bears in the early morning hours and send the high-yielding currency to its current level of 1.024.
The Aussie is just off of the session highs, but a strong momentum seems to be forming as European leaders decided to extend the deadline for the Spanish austerity targets to be met. Support in the currency pair is provided by the lows we reached on Monday at 1.015, while resistance is formed by the highs of last week around 1.030. Oscillators are trending higher, but remain in mid-range with the relative strength index at 55 and the stochastic at 71. The MACD is just a whisker below the key 0 level.
Traders, who intend to put their money in the AUD/USD should monitor closely the scheduled to be released later this week economic data.
First, the reserve bank of Australia deputy governor Philip Lowe is due to speak later today at the 41st Australian conference of economists. The speech he will deliver might provide some clues about the future monetary policy of the Australian central bank. Tomorrow, Westpac consumer sentiment and home loan figures are announced. Analysts are expecting the number of new loans granted for owner-occupied homes to have increased by 0.9% as compared to the modest increase of 0.2% for the month before. On Thursday, Melbourne Institute inflation expectations are released and they will be closely monitored as they have traditionally had a relatively strong influence over the Aussie.
Disclaimer:
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.
