AUD / USD traded lower this morning, the downward trend caused by market pared gains "ill-gotten "overreaction after RBA minutes continuously. Prices were further downward pressure to 11h Sydney morning (8:00 SGT) when skilled vacancies Australia numbers were released - 1.4% M / gain 1.7% against previous. It's not a bad impression by most standards, but the price sank to 0.017 before the news at a minimum of 0.899 at the time that followed. It is also interesting to note that over the wage index of expected costs that was released 30 minutes later, did nothing to dampen the downward shock, and the difference in reaction adds further confirmation that the feeling in AUD / USD is bearish, which opens up more bearish movement in the near future.
timetable
To be fair, it should be noted that the two new above mentioned are not big hitters and rarely received no mention on the news. Therefore, to say that all the losses suffered today is due to the bad economic news may be tenuous. It is likely that technical pressures have played an important role as well, as the price broke below 0.02 support just before the news was released. Also, there is extra pressure of the bearish rejection down trendline. The accumulation of all these factors led AUD / USD to hit below 0.0 support round number.
However, prices do not remain below the round number support for long. Currently, we are heading towards the downward trend line again after a rebound. But given the bearish sentiment underlying AUD / USD and S / T bearish technicals, it is unlikely that prices may be able to break above the trend line, and the price can rather bounce on the line once more and then tend to push below 0.0 for a downward extension.
Perhaps the final nail in the bearish conviction for AUD / USD is the fact that risk appetite does not share with the bearishness in the currency pair. Asian stocks indices are mostly optimistic and even the Nikkei 225 which has seen more than 0.5% decline in fact stabilized and traded higher than the opening levels. Even EUR / USD and other risk currencies do not suffer the same bearishness. As such, even if AUD / USD starts to rise above and other risk correlated assets, expect AUD / USD to underperform, and the risk of bearish downturn become higher.
Daily Graphic
daily chart is also bearish Evening Star candlestick with a pattern formed. Stochastic readings also started pointing down and is crossing the signal line soon. We are still some distance from a good bearish signal cycle, but downside follow through should be strong, especially if price break below 0.897 flexible support when the curve below Stoch hit 80.0. This would open the next wave of bearish momentum and 0,866 open as bearish target 1 with 0.886 as intermediate support.
Basically, it is true that the RBA less likely to cut rates, but this is not a good reason for further gains AUD / USD. While the market may have priced in a rate cut expectations already, but it should be noted that we are currently more than 300 pips above the recent swing low, so it is reasonable to think that the market has already fully prices in 2014 RBA flat rate, or is close to doing so. Whereas the prospect of economic growth in Australia continues to look weak, while USD should further strengthen due to candles Fed outlook for AUD / USD remains bearish
Links :.
S & P 500 Technical - Weakness Seen With Higher Downside Risks
GBP / USD - Steady as CPI dips below 2.0% level
USD / CAD - rangebound trade continues
This article is only for general information purposes. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or its subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
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