By Fast Brokers – The AUD/USD is staging a rally from intraday lows after continuing its decline in reaction to slightly weaker than expected Manufacturing PMI data from China. Weakness in China implies a decline in demand for Australia’s commodities, a negative development for the Aussie. However, the Dollar is depreciating across the board and gold is firming as investors await America’s Manufacturing PMI data. It seems the Dollar is falling victim to overbought conditions right now and the AUD/USD is benefitting. However, more fundamental data from the U.S. could illicit further volatility, particularly if the number prints above analyst expectations. Friday’s strong U.S. data set yielded a broad-based rally in the Dollar and it wouldn’t be surprising to see this happen again considering uncertainty surrounding China, the EU and U.K. However, attention will then shift to Australia with the RBA making its monetary policy decision during tomorrow’s Asia trading session. Although a majority of analysts still expect a 25 point hike, recent liquidity tightening in China coupled with weak Australia PPI data may lead the RBA to pause its rate hikes as markets determine how China’s more hawkish monetary policy impacts markets. Furthermore, recent uncertainty regarding Greece’s outstanding debt may also entice the RBA to take a wait-and-see approach. That being said, tomorrow’s RBA decision could have a considerable impact on the AUD/USD due to rising investor uncertainty. Furthermore, investors will also receive Pending Home Sales during tomorrow’s U.S. trading session followed by Australia’s Trade Balance on Wednesday. Hence, the AUD/USD could remain active for the next 48 hours.
Technically speaking, the AUD/USD is currently fighting to stay above our 1st tier uptrend line with multiple uptrend lines hanging below. Additionally, December 2009 lows could serve as a technical cushion should they be reached. As for the topside, the AUD/USD faces multiple downtrend lines along with 12/24, 12/28 and 1/29 highs serving as technical barriers. Furthermore, the .9000 area could serve as a psychological force should it be reached.
Price: .8848
Resistances: .8851, .8863, .8870, .8887, .8907, .8923
Supports: .8822, .8810, .8796, .8779, .8765
Psychological: .90, January highs and December lows
Market Commentary provided by Fast Brokers.
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