By Fast Brokers – The Aussie is underperforming again as the currency pair suffers from the RBA’s tightening monetary stance. Hence, with the window of future rate increases closing, the Aussie is losing a bit of its allure as a safe bet. Furthermore, it is likely that the concept of a slowdown in China is weighing on the Aussie with the Shanghai Composite entering a bear market. A cool down in China implies a reduction in demand for Australian resources, clearly an Aussie negative since China has been fueling Australia’s economic growth. Meanwhile, uncertainty in the EU surely doesn’t help the Aussie’s cause since the RBA noted it is concerned about a spillover from fiscal issues in European countries. Therefore, with the entire risk trade under pressure the Aussie has opted to assert a relative weakness due to a combination of both global and domestic problems. Although Australia will release inflation expectations data tomorrow, attention will likely remain focused on the EU with leaders jockeying to agree upon details for the $1 trillion fiscal rescue package. Unfortunately, as long as EU leaders argue the longer the Aussie and risk trade will remain under pressure.
Technically speaking, the Aussie faces technical barriers in the form of intraday and 5/18 highs. As for the downside, the Aussie has technical cushions in the form of intraday and September 2009 lows
Price: .8411
Resistances: .8412, .8427, .8442, .8461, .8479, .8494, .8514
Supports: .8395, .8377, .8358, .8342, .83
Psychological: .85, .84, .83, September and August 2009 lows
Market Commentary provided by Fast Brokers.
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