By Fast Brokers – The Aussie is settling below monthly highs after yesterday’s bounce wasn’t able to carry through 6/14 levels. Although the Aussie still faces considerable downward pressure, the risk trade as a whole has newfound upward momentum with investors dipping back into the risk pool on oversold conditions. Although EU news wires were relatively quiet last week, rumors have spread that the IMF and U.S. Treasury are working on a $350 billion line of liquidity for Spain. Therefore, investors should keep an eye out for any further developments since Spain carries much more weight in the EU than Greece. However, we should keep in mind that rumors are only rumors until confirmed. More importantly for the Aussie, the U.S. is putting more pressure on China to appreciate the Yuan since this month’s trade balance revealed an encouraging improvement in demand for Chinese exports. Stories have been popping up in the China Daily that the government could make a move on the currency in the next two weeks. Should China appreciate, this could slow China’s economic growth and deliver a near-term blow to the Aussie. Therefore, investors should stay on their toes since. Australia will be silent on the data wire again tomorrow, meaning the currency will be in the hands of any psychological forces along with key U.S. data on deck.
Technically speaking, the Aussie faces technical barriers in the form of 6/14 and 5/18 highs. As for the downside, the Aussie has supports in the form of uptrend lines running from May lows along with 6/11 lows and the psychological .85 and .84 levels.
Price: .8615
Resistances: .8617, .8637, .8664, .8690, .8713, .8738, .8770
Supports: .8587, .8565, .8543, .8523, .8500, .8469, .8455, .8435
Psychological: .85
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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