By Fast Brokers – The Aussie is consolidating above its psychological .82 level following last week’s steep decline. It seems investors are taking advantage of oversold conditions as the risk trade stabilizes across the board. Investors punished the Aussie last week as the Shanghai Composite experienced a heavy selloff and Australian resource companies tumbled amid fear of a decrease in demand from China. Additionally, investors feel the new government tax levied on resource companies could hamper economic growth. All of this points to a neutral stance at the RBA and the central bank did not deviate from this assumption by citing worries that problems in the EU could spill over into the global economy. On a positive note, the Shanghai Composite is up over 3% today after the government announced that new property taxes may not come into effect for another few years. However, this is all speculation and we’ll have to see how the situation develops. Regardless, an upturn in the SCI is good news for the Aussie since the composite has been dragged into a bear market. Australian new motor vehicle sales screamed higher by 8.4% last month despite the RBA rate hikes. Data points like these help provide validity for the central bank’s hawkish monetary regime. Australia will be quiet on the data wire tomorrow, leaving to currency pair up to broad-based movements in the risk trade over the near-term, meaning investors should keep a sharp eye on the news wire for any new developments in the EU.
Technically speaking, the Aussie faces technical barriers in the form of 5/21 highs and the psychological .85 level. As for the downside, the Aussie has technical cushions in the form of intraday, 5/20, and September 2009 lows.
Price: .8277
Resistances: .8291, .8314, .8329, .8341, .8363, .8384
Supports: .8251, .8224, .8195, .8172, .8154, .8138
Psychological: .85, .84, .83, May 2010 and September 2009 lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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