By Fast Brokers – Though the Aussie is exerting a relative strength today, the currency pair is still shrugging lower and testing weekly lows as the risk trade deteriorates across the board. The Aussie’s relative strength likely stems from yesterday’s stronger than expected employment change data as Australia benefits from demand for its resources. Hence, the RBA could be enticed to raise rates again next month should uncertainty in the EU manage to calm over the next couple weeks. However, if the Euro continues its downturn then the RBA may find global conditions too unstable in regards to tightening again. Regardless, Australian fundamentals are still strong, allowing the Aussie to hold above .89 level despite incredible weakness in the Euro and Pound. On the other hand, the downturn in China’s SCI and recent weakness in China real estate prices could be a cause for concern for the Aussie over the medium-term should this impact Chinese fundamentals. However, the near-term picture is improving and the Aussie is taking full advantage of its relative strength for the time being. Meanwhile, investors should keep an active eye on the EUR/USD and Cable, for a return to last week’s volatility may leave the Aussie little option but to follow suit.
Technically speaking, the Aussie faces technical barriers in the form of the psychological .90 area along with intraday and 5/10 highs. As for the downside, the Aussie has technical cushions in the form of intraday and 5/7 lows along with the psychological .89 and .88 levels.
Price: .8911
Resistances: .8923, .8932, .8947, .8962, .8976, .8987, .9001
Supports: .8908, .8898, .8885, .8869, .8855, .8843
Psychological: .90, .89, .88
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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