By Fast Brokers – The Aussie is consolidating following yesterday’s solid upswing in the wake of positive U.S. Retail Sales data. Surprisingly, the Aussie has shown a muted reaction to solid Chinese GDP and Industrial Production growth. China’s economic recovery is moving full steam ahead, which is normally a positive for the Aussie due to raised expectations for commodity demand. Perhaps such strong growth in China is worrying investors that the government will either have to appreciate or tighten soon to cool growth, a negative for the Aussie. Either way, the Aussie is still locked into its impressive uptrend. Meanwhile, inflation expectations are on the rise in Australia, signaling the RBA may have leverage to raise rates again next month despite slowdowns in several fundamental data points. Should the RBA remain on the offensive, this would likely keep the Aussie on its upward trajectory unless the central bank was to state that it is finished with its tightening. The data wire will be relatively quiet tomorrow until the U.S. session with Building Permits and Prelim Consumer Sentiment on the way. Positive U.S. economic data could benefit the Aussie and the risk trade as a whole. Additionally, investors should also keep an eye out for upcoming earnings reports before and after the bell for positive U.S. earnings may also benefit the Aussie.
Technically speaking, the Aussie faces technical barriers in the form of previous April highs. As for the downside, the Aussie has multiple uptrend lines serving as technical cushions along with intraday, 4/12, and 4/6 lows. Additionally, the psychological .93 level could continue to serve as technical cushion over the near-term.
Price: .9330
Resistances: .9342, .9359, .9373, .9391, .9403, .9410, .9432
Supports: .9327, .9315, .9300, .9289, .9272, .9257
Psychological: .93, .92, November 2009 highs, April highs and lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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