The Aussie lost its upward momentum and moved lower all week long. After touching highs of 1.0617 last week the AUD/USD hovered around the tops for quite some time before finally reversing its upward trend. The week was not heavy on economic news, but still there were some important releases in the middle of the week. On Tuesday, the National Australia Bank (NAB) announced its business confidence figures for July. According to the survey, conducted by the NAB, respondents saw the local business conditions improving with the economic indicator coming at its highest level since May. By contrast, in the month of June, the survey indicated that the business conditions are worsening. At the same time, the new motor vehicle sales dropped by 0.8% on a month over month basis. This was their second consecutive month of declines. To make the matters worse, the June figure was revised on the downside – from -0.6% to -1.0%. The AUD/USD slipped on the news after having pushed both below its 25-period and its 50-period moving averages in the previous session. The Aussie finished the day slightly off of the lows of 1.0461, which we touched towards the end of the trading day. On Wednesday, more news hit the wires. First the Westpac consumer sentiment figures were released. According to the announced number the economic conditions were expected to worsen in the future by 2.5%. This was the first negative reading of the indicator since March and came after last month the same survey, conducted by the Westpac Banking Corporation, indicated that the business climate in Australia was expected to improve. Later in the day the wage price index for June was announced, coming at 1.0%. Analysts were expecting a more modest reading of 0.8%, which would have effectively shown that the price government and businesses pay for labor has grown at a slower rate in June than in May. Instead, the growth of wages proved to be stronger in June than in the previous relevant period. The AUD/USD rose on the news after bouncing off of the support level at 1.0449, where the intermediate lows of early August stand. After approaching the 25-period moving average, however, the currency pair lost its momentum and declined to close at 1.0478. Yesterday the MI inflation expectations were announced, revealing that consumers expect the price of goods and services to increase by 2.4%. The number was well below the 3.3% increase, which consumers expected prices to grow in the survey, conducted in June. The AUD/USD gained after the news were released, pushing above its 25-period moving average and stopping slightly below the 50-period moving average. The bounce in the Aussie, however, proved to be unsustainable as the IMF released a report today, in which it claimed that the Australian dollar is overvalued. Market participants sold the currency on the news, sending it to fresh new lows against its U.S. counterpart. The AUD/USD even tested the support at the 1.0400 level, but failed to break below it. Currently the Aussie is standing at 1.0423, but the downward pressure continues to be elevated. Oscillators are all trending lower with the relative strength index approaching the lower band of its range and the stochastic already in oversold territory. The MACD is moving below 0 and is issuing sell signals. Also, binary traders should have in mind that the Aussie seems to be entering in a head and shoulders formation, which might be seen as a trend reversal indication.
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.