Article by ForexTime

AUD/USD notched up a 12-day peak of 0.9342, which exactly matched the 100-day moving average. The currency found an underpinning from the RBA minutes, which highlighted an easing in financial conditions with Australia banks having lowered lending rates, which was taken as a sign that a further reduction in the official rate cut may be less likely.

The AUD-NZD cross also supported the Aussie overall, with the kiwi coming under pressure on soft PPI and NZ Treasury’s pre-election fiscal update, which sent the cross rose to the highest level since December last year while NZD-USD fell to a six-day low. A six-week downtrend in commodity prices correlated with the two-month the Aussie posted at 0.9239 in early August, though the relatively high yields in Australia remain an offsetting attraction.

The RBA reiterated that stability is the most likely rate course, according to the August meeting minutes. The bank downplayed recent higher inflation readings, saying inflation is likely to be consistent with the 2% to 3% target over the next two years. Output growth is seen softer in the near term, but expected to gradually improve. The outlook is subject to a significant degree of uncertainty, given the abundance of opposing forces they note. Overall, the minutes reinforced the take-away from the meeting, which was that rates will be on hold for a while.

New Zealand PPI inputs fell 1.0% in Q2 (q/q) following a 1.0% increase in Q1 and 0.7% Q4 decline. PPI outputs fell 0.5% in Q2 (q/q) after the 0.9% rebound in Q1 and 0.4% drop in Q4. PPI inputs rose 1.4% compared with Q2 of 2013 after the 3.1% y/y rise in Q1. PPI outputs rose 2.5% y/y in Q2, a slowing from the 4.0% rate of increase in Q1. The decrease in input and output prices on a quarterly comparable basis was mostly due to prices for dairy products, according to Statistics NZ.

The next level of target resistance is seen near 0.94, which support is seen near the 10-day moving average at 0.9300.  Momentum on the currency pair has turned positive as the MACD (moving average convergence divergence) index generated a buy signal.  This occurs when the spread (the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread.  The index moved from negative to positive territory confirming the buy signal.  The RSI (relative strength index) moved higher with price action, reflecting accelerating positive momentum.

Article by ForexTime

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