AUD/USD Runs Into Resistance At 0.80

AUD/USD for Wednesday, May 13, 2015

To start this new week, the Australian dollar has done well and made a push back to the key 0.80 level where it is presently running into resistance. The last couple of weeks has seen the Australian dollar on a roller-coaster ride, moving from below 0.78 and up to near 0.81. Earlier last week, the Australian dollar surged higher; however, it ran into resistance right around 0.7950 and 0.80, before easing slightly and consolidating in a narrow range between 0.7850 and 0.79 to finish out the week. A couple of weeks ago, it enjoyed a solid start to the week, moving to a three month high just shy of 0.81. It then eased back towards the key 0.7850 level again, where it received some support. A few weeks ago, the Australian dollar looked poised to break through the long standing resistance level at 0.7850, even though this level has stood up tall for several months now. During this time, the Australian dollar fell sharply but landed on the previous key level at 0.77, which has offered considerable support since that time.

Since the beginning of March, the Australian dollar has relied heavily on support at the 0.76 level. Below 0.76, its next obvious support level is down at 0.7550 and it will hope to be propped up by it. Back in early March, the Australian dollar made a statement and broke down strongly through the key 0.77 level, which then provided significant resistance for the following few days. It was also able to enjoy some short term support around 0.7550, which propped it up and allowed it to rally strongly back up to above 0.79. Throughout February, the Australian dollar made repeated attempts to move up strongly to the resistance level at 0.7850; however, it was rejected every time and sent back easing lower, which is why this level remains significant presently. Just prior to that, towards the end of February, the Australian dollar moved through the resistance at 0.7850 to reach a new four week high around 0.7900. In the second half of January, the Australian dollar fell very sharply and broke lower from the trading range that had been established roughly between 0.8050 and 0.8200.

Back in mid-January, it made numerous attempts at the resistance level at 0.82, only to be sent back often before finally finishing that week moving through this key level. In doing so, it was able to reach a one month high near 0.83, before being sold back down again towards 0.82 as the resistance and selling activity above this level kicked in. Over the Christmas / New Year period, the Australian dollar seemed to have been content with trading in a narrow range below the resistance at 0.82, which continues to remain a key level as it is presently provides resistance. The Australian dollar experienced a disappointing November and December, moving from resistance around 0.88 down to the new lows recently. For a couple of months from September through to November, the Australian dollar did well to stop the bleeding and trade within a range between 0.8650 and 0.88 after experiencing a sharp decline throughout September, which saw it move from close to 0.94 down to below 0.8650.

Australian Treasurer Joe Hockey has thrown $5 billion of tax relief at small business and farmers, and has given $4.4 billion in support for families to stimulate the economy and kickstart the coalition’s electoral hopes. “This is a budget that unleashes our nation’s potential,” the treasurer declared as he delivered his second budget on Tuesday. A deficit of $35.1 billion for 2015/16 defied economists’ expectations, and the government still expects to return to surplus in 2019/20. But the budget papers still forecast a jobless rate of 6% or over until 2018/19, despite a 0.5% lift in economic growth. Sensible savings, prudent spending and redirected funding to small business and child care, infrastructure would boost growth and jobs, Mr. Hockey said. Small business will get a corporate tax rate cut of 1.5%, an annual 5% tax discount of up to $1000 a year for unincorporated businesses and, from budget night, an immediate tax deduction for all items purchased by a small business up to $20,000.

(Daily chart / 4 hourly chart below)

AUD/USD Daily Chart

AUD/USD 4 Hour Chart

AUD/USD May 13 at 00:10 GMT 0.7978 H: 0.8000 L: 0.7886

AUD/USD Technical

S3S2S1R1R2R30.78500.77000.76000.80000.8200—

During the early hours of the Asian trading session on Wednesday, the AUD/USD is consolidating in a narrow range right under 0.80 after edging higher to this key level. Current range: trading right below 0.80.

Further levels in both directions:

• Below: 0.7850, 0.7700, and 0.7600.

• Above: 0.8000 and 0.8200.

OANDA’s Open Position Ratios

OANDA AUD/USD Open Position Ratios

(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for the AUD/USD has moved back to near 50% as the Australian dollar has edged higher towards 0.80. The trader sentiment is in favour of long positions.

Economic Releases

  • 23:50 (Tue) JP M2 Money Supply (Apr)
  • 01:30 AU Wage Price Index (WPI) (Q1)
  • 08:30 UK Average Earnings (incl. bonus) (Mar)
  • 08:30 UK Claimant Count (Apr)
  • 08:30 UK ILO Unemployment Rate (Mar)
  • 09:00 EU GDP (1st Est.) (Q1)
  • 09:00 EU Industrial production (Mar)
  • 09:30 UK BoE Releases Quarterly Inflation Report
  • 11:30 EU ECB minutes of previous meeting to be released
  • 12:30 US Import Price Index (Apr)
  • 12:30 US Retail Sales (Apr)
  • 14:00 US Business inventories (Mar)
  • JP Economy Watchers Survey (Apr)
  • WLD IEA release monthly oil market report

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