Back
15 May 2013
Forex: AUD/USD approaching critical trend line support on weekly chart
FXstreet.com (Barcelona) - The Aussie continued its descent today, closing down another 0.58% to finish at 0.9895. The pair has given up just over 4% in the past six trading days and is trading at its lowest level since early June 2012. The AUD Budget release was the main economic report out of Australia yesterday’s session, which was released at 9:30 GMT. In the upcoming Asia session we will see AUD New Motor Vehicle Sales, and Wage Price Index. Currently, the pair is trading up 7 pips at 0.9902 in early Asia trade.
According to analysts at NAB Global Markets, “As for last night’s Budget, the AUD lost half a cent in short order on the release of the budget projections showing deficits of $19.4bn for the current year, $18bn in 2013-14 and no return to surplus until 2015-16. These were bigger numbers than generally expected and can rightly be seen as the result of a weaker economy (indeed NAB’s view is that nominal GDP
will be weaker than the Treasury is forecasting and that this will mean tax revenues end up being even weaker than projected for the next year or so).”
They went on to add, “That said, AUD losses have to be seen in the context of broader USD moves,
with the currency sitting mid-pack in the G10 pecking order. We see no specific lasting damage to the AUD from the Budget, in which respect the ratings agencies (Moody’s and S&P) were quick to reaffirm the AAA sovereign rating, both citing the low level of net debt as a major rating positive.”
From a technical perspective, the pair is now approaching a key support trend line (best seen on the weekly/monthly charts) which comes in around 0.9880. This is the bottom boundary of a massive ‘pennant’ continuation pattern which has been forming since late July 2011. A weekly close below 0.9880 would confirm the pattern, which has measured move targets all the way down near 0.9070
According to analysts at NAB Global Markets, “As for last night’s Budget, the AUD lost half a cent in short order on the release of the budget projections showing deficits of $19.4bn for the current year, $18bn in 2013-14 and no return to surplus until 2015-16. These were bigger numbers than generally expected and can rightly be seen as the result of a weaker economy (indeed NAB’s view is that nominal GDP
will be weaker than the Treasury is forecasting and that this will mean tax revenues end up being even weaker than projected for the next year or so).”
They went on to add, “That said, AUD losses have to be seen in the context of broader USD moves,
with the currency sitting mid-pack in the G10 pecking order. We see no specific lasting damage to the AUD from the Budget, in which respect the ratings agencies (Moody’s and S&P) were quick to reaffirm the AAA sovereign rating, both citing the low level of net debt as a major rating positive.”
From a technical perspective, the pair is now approaching a key support trend line (best seen on the weekly/monthly charts) which comes in around 0.9880. This is the bottom boundary of a massive ‘pennant’ continuation pattern which has been forming since late July 2011. A weekly close below 0.9880 would confirm the pattern, which has measured move targets all the way down near 0.9070