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Overnight economic figures hindered any hopes of a relief rally in the short run. Recent sell offs across global over the past few weeks have succeeded in holding investors on the sideline, while major institutions and central banks assess the potential damage of the most recent correction in equities. The US dollar and gold have emerged as the safest bets in the immediate future, as both continue to benefit from “risk aversion”.
EURUSD
The Euro continues to fall against the greenback, extending its largest monthly drop in over ten years against American currency. The European currency lost 7.4% against the USD in May, its sixth straight monthly decline, as the 16-nation currency has been unable recover from the region’s debt crisis. Any indication of a recovery in the price action is immediately followed by a sell off supporting the argument that all attempts at recovery are simply new opportunities to short the flailing currency
Support/Resistance 1.2200/1.2333
AUDUSD
The Australian Dollar extended losses overnight after RBA governor, Glenn Stevens, opted to hold the nation’s benchmark rate at 4.50% and signaled that the central bank may keep borrowing costs unchanged in coming months. Rising concerns about the global economic recovery and Europe’s sovereign debt crisis have hurt the Aussie. The currency fell 8% against the USD in May – its worse monthly performance since January 2009.
The Australian currency has suffered proportionally to the loss in global risk appetite and will most likely continue to suffer barring any major change in investor sentiments.
Support/Resistance 0.8195 0.8420
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