By Fast Brokers – The Aussie is consolidating above 4/8 lows as the risk trade weakens a bit across the board. A decline in the Aussie could be considered healthy since the currency pair just set new 2010 highs. Meanwhile, even though Australia has been quiet on the data wire thus far this week, chatter has been emanating from RBA members that recent rate hikes may be having their desired effect, meaning the central bank could keep its policy in check next meeting should economic fundamentals wane. That being said, the Aussie could follow its correlation with the overall risk trade more closely over the near-term until investors receive Australia fundamentals or psychological news concerning monetary policy. Hence, the Aussie could lose a bit of its relative strength with investors locking in some profits. Meanwhile, although Australia will be relatively quiet, the U.S. earnings season is kicking off and investors will also digest U.S. Retail Sales and CPI data tomorrow, meaning activity could pick up across the FX markets over the next 24-48 hours. Of more importance to the Aussie will be Thursday’s key data set from China. Should China’s economic recovery cool due to tighter liquidity measures, this could place some downward pressure on the Aussie due to lowered expectations for commodity demand, and vice versa. Regardless, the Aussie does have a solid support system in place due to the extent of this year’s upswing, meaning the currency pair will need to be dealt a heft blow to be knocked out of its current uptrend.
Technically speaking, the Aussie faces technical barriers in the form of intraday, 4/12, and 11/17/09 highs. As for the downside, the Aussie has multiple uptrend lines serving as technical cushions along with intraday, 4/6, and 3/31 lows. Additionally, the psychological .92 level could serve as technical cushion over the near-term.
Price: .9256
Resistances: .9266, .9280, .9291, .9306, .9316, .9330, .9342
Supports: .9247, .9234, .9215, .9202, .9190, .9104
Psychological: .93, .92, November 2009 highs, April highs and lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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