By Fast Brokers – The Aussie is sinking back towards 6/1 lows after Australia’s GDP printed a basis point below analyst expectations. This adds onto yesterday’s discouraging building approvals figure in showing that the RBA’s rate hikes are cooling Australia’s economy. Hence, the central bank may be less inclined to raise rates next month, especially considering present instability in the EU. Meanwhile, the Shanghai Composite is down another -1.6% right now and is heading towards a test of its psychological 2500 level. Hence, fears of a China slowdown are still weighing on equities and could also drag the Aussie lower due to the interdependence of the two economies. The EU data wire will be relatively quiet today, leaving U.S. pending home sales in the spotlight. Additionally, investors should watch out for any new developments in the EU regarding its fiscal crisis. Australia will release its trade balance data tomorrow and this should give investors a broader picture of the state of Australia’s economy. Should the trade balance reveal a slowdown in export demand, this could weigh on the Aussie further since Australia is reliant on demand for its natural resources.
Technically speaking, the Aussie still faces multiple downtrend lines along with 6/1 and 5/28 highs. As for the downside, the Aussie has technical cushions in the form of 5/27 and 5/25 lows. Additionally, the psychological .82 area could serve as a solid technical cushion should it be tested.
Price: .8317
Resistances: .8332, .8343, .8356, .8374, .8390, .8410, .8432
Supports: .8307, .8278, .8260, .8242, .8223, .8202, .8187
Psychological: .85, .80, May lows
(click chart to enlarge)
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