By Fast Brokers – The Aussie crashed with the risk trade yesterday as a collapse in U.S. equities and a shutdown in EU interbank lending sent the dollar flying higher. The Aussie was certainly no exception, testing its psychological .87 level. The Aussie has managed to pop back above .88, yet downward pressures remain as U.S. equities tack onto yesterday’s selloff. The Aussie is suddenly trading back at February levels with .90 hanging high overhead. The question now becomes when the risk trade can find stability. While the weekend could investors and markets time to cool down and reflect so as to start next week on fresh footing, the Aussie could experience more volatility on Monday with key economic data from China on deck. China will release trade balance data followed by CPI and industrial production on Tuesday. Since Australia’s economic performance is highly reliant on resource demand from China, any confirmation of a slowdown in China could place more near-term downward pressure on the Aussie. On the other hand, encouraging economic data from China may help the Aussie stabilize and regain its footing. Australia will also release job advertisements and business confidence data during Monday’s trading session. Should Australia’s data outperform this could also help buoy the Aussie since the RBA could feel the need to stay hawkish if conditions in the EU can stabilize between now and the RBA’s next monetary policy meeting.
Technically speaking, the Aussie faces technical barriers in the form of intraday highs and the psychological .90 area. As for the downside, the Aussie has technical cushions in the form of intraday and 5/6 lows along with the psychological .88 and .87 levels.
Price: .8821
Resistances: .8824, .8836, .8846, .8856, .8869, .8879, .8889
Supports: .8811, .8800, .8780, .8772, .8762, .8749, .8736
Psychological: .90, .89, .88
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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