Last week the improved sentiment among investors sent the Australian dollar higher against its American counterpart. We started the week very close to the 50-period moving average and moved higher in four of the five sessions. Even the several worse-than-expected releases for the Australian economy were not able to put off the investors, who were encouraged by the wonderful earnings announcements of some big international corporations. The rising resource prices also helped lift the high-yielding currency, which marked a fresh new high against the American dollar for the period after May onset. The Aussie traded as high as 1.0447 on Thursday, but on Friday the high-yielding currency pared some of its weekly gains, finishing at 1.0395. Today the growing concerns about the stability of the Eurozone sent the AUD/USD even lower after two Spanish regions requested financial help from the central government. The resource prices also slipped, adding to the pressure on the Australian currency. The currency pair moved below its 25-perid moving average and is currently trending lower, trying to break the support at its 50-period moving average. Although the PPI figures for the Australian economy came in better than expected, investors rushed to sell their holdings in risky assets as the growing fears of Europe’s debt problems significantly outweighed the positive economic data. The PPI came in at 0.5%, well above the 0.3% reading analysts were expecting and drastically higher than the -0.3% we saw for the previous month. Technically speaking, the first significant support level in the Aussie is provided by the 1.0200 level, while resistance stands at the highs of last week around 1.0430. Oscillators are all moving lower with the relative strength index just entering oversold territory, standing at 36 and the stochastic already well below the lower band of its range, standing at 6. The MACD is approaching the key 0 level after retracting from the highs it touched last week. Traders, who want to put their money in the AUD/USD should monitor closely the news that are scheduled to be released later in the week. On Tuesday we have the RBA Governor Stevens speak at the Anika Foundation Luncheon and on Wednesday we have the CB Leading Index and CPI data being released. Investors should also bear in mind that the debt problems in the Eurozone will probably be a major market mover.
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.