News
Cyprus & World News

AUDUSD records a new 2014 high

02 July, 2014

By Jameel Ahmad, Chief Market Analyst at FXTM

The AUDUSD continued its recent advancement in response to the RBA leaving interest rates unchanged, while the pair also benefited from the announcement that China’s manufacturing PMIs were confirmed at a 6-month high. The RBA interest rate decision was also absent from a dovish post rate statement suggesting that the Australian currency was overvalued, which might be expressed during an upcoming RBA minutes release.

All in all, the absence of a dovish RBA statement alongside the positive China data has led to the AUDUSD surpassing the 0.9463 psychological resistance level on my daily timeframe. The pair is now looking to surpass the 0.9474 resistance level, and the next 48 hours are likely pivotal towards whether the pair can surpass this resistance, or encounter a pullback.

On Thursday morning, the latest building approvals and retail sales figures are released from Australia. The Australian economy is under pressure to refrain from relying on their mining and export industries, and were recently criticized for these sectors contributing towards 0.9% of their recent 1.1% quarterly GDP growth. Economists would prefer for the Australian economy to become more reliant on domestic consumption, including both building approvals and retail sales. Currently, building approvals are expected to increase by 3.5%, with Retail Sales expected to advance by 0.3%.

This Thursday, the latest US non-farm payroll is also scheduled to be released. It is possible that a major contributing factor behind the AUDUSD’s recent bullish momentum is because confidence has decreased in the US economy. During the FOMC meeting two weeks ago, the Federal Reserve downgraded their 2014 economic growth projections. Additionally, Janet Yellen refrained from offering a specific timetable for a US interest rate hike. Since then, we have received confirmation that during the 1st quarter of 2014, the US economy contracted by an annualised 2.9%.

The alarming GDP confirmation has added increased pressure for Thursday’s non-farm payroll to impress. The US employment sector has made substantial progress as of late. For example, the US economy has now recovered all of the 8.7 million jobs they lost during the recession. Also, the US has added over 200,000 jobs to their economy for the past four consecutive months (something that hasn’t been achieved since 2000). However, the response to the US economy adding 217,000 jobs last month was muted. With Janet Yellen refraining from offering an indication for the Federal Reserve to raise interest rates, I am weary that unless we see an NFP figure above 220,000 this month, the response on the markets will be muted once again.

In regards to the technicals on the Daily timeframe, the AUDUSD has recently surpassed the 0.9463 resistance level and is now challenging a November 2013 high at 0.9475. If the pair continues to advance, further resistance is situated at 0.9520.

However, both the Stochastic Oscillator and RSI are suggesting that the pair is close to reaching the overbought boundaries. If the Australian economic data disappoints, or the US NFP impresses, an AUDUSD pullback is likely. In which case, the AUDUSD could possibly use previous resistance levels as support. Possible levels are situated at 0.9425 and 0.9360.

For more information please visit www.ForexCircles.com  

Disclaimer: The content in this article comprises personal opinions and ideas and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime Ltd, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

FXTM
ForexTime Ltd (FXTM) is a forex broker founded by Andrey Dashin in December 2012. FXTM provides access to the global currency market and offers trading in forex, precious metals, Share CFDs, ETF CFDs and CFDs on Commodity Futures. Trading is available via MT4 and MT5 platforms with spreads starting from just 0.5 on the Standard MT4 trading platform and from 0 on the ECN.MT4 and ECN.MT5 trading platforms. Bespoke trading support and services are provided based on each client’s needs and ambitions - from novices, to experienced traders and institutional investors. The company is registered as a Cyprus Investment Firm under registration number HE310361 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 185/12.