By Fast Brokers – The Aussie has stumbled back below its psychological .90 level as the risk trade struggles across the board. The EUR/USD is sliding towards Thursday lows with investors and analysts questioning the effectiveness of the $1 trillion rescue package. The Aussie has naturally followed the risk trade lower today considering RBA could lay off of its hawkish monetary policy stance. In addition to the influence of the EU, the Aussie is also reacting negatively to today’s disconcerting data and news from China. Chinese pricing data eclipsed analyst estimates, stoking speculation that the government will need to get more aggressive in cooling the economy. In fact, a comment emanated from the central bank stating that China is nearly ready to begin tightening and appreciating the Yuan. The SCI tumbled in reaction to these developments, officially entering a bear market. This is negative for the Aussie since a slowdown in China’s economy could take a large bite out of demand for Australia’s resources, a key component of GDP. Hence, the Aussie is losing a bit of its allure as an outperformer in the FX markets. Australia will light up the data wire tomorrow by releasing its home loans figure. Should the number disappoint this could weigh on the Aussie since the RBA may determine that its rate hikes are having their desired impact. On the other hand, strong home loans data could buoy the Aussie due to speculation that the RBA could stay aggressive monetarily next month. The EU, UK, and U.S. will also release key data points, meaning the Aussie could remain active for the next 24 hours.
Technically speaking, the Aussie faces technical barriers in the form of the psychological .90 area along with intraday and 5/5 highs. As for the downside, the Aussie has technical cushions in the form of intraday and 5/6 lows along with the psychological .89 and .88 levels.
Price: .8961
Resistances: .8964, .8976, .8987, .9001, .9017, .9036, .9057
Supports: .8947, .8932, .8920, .8908, .8888, .8879, .8855
Psychological: .90, .89, .88
(click chart to enlarge)
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