Friday, October 16, 2015

AUD/USD: full load-down, get your reading specs on

FXStreet (Guatemala) - AUD/USD is currently trading at 0.7327 with a high of 0.7363 and a low of 0.7265.

AUD/USD has recovered from the supply below the 0.7350 level while supported by the 55 SMA on the hourly chart with weakness appearing back into the greenback after a limited bounce with the US CPI's beating expectations, (1.9% vs 1.8% exp 1.8% and prev) and Dudley speaking, setting back ideas that a rate hike is at all imminent.

AUD/USD key fundamentals

AUD/USD has otherwise riding the optimism in the RBA's outlook for the Australian economy and risk-on sentiment from week to week. However, yesterday's jobs data was soft and wasn't taken lightly to begin with, as the market regarded it as weak overall and sold the Aussie. However, what is most important is how the RBA will perceive the details of it and the market soon had a rethink and demand followed.

Headline employment fell –5.1k, vs median +9.6k, the participation rate eased, while the unemployment rate was unchanged at 6.2%. "But as far as the RBA is concerned, annual employment growth remains decent at 2%/yr and unemployment remains steady at 6.2%," explained analyst at TD Securities.

The argument for a rate cut vs higher CPI's and commodity prices

We then had the article from Australian Financial Review beating down the same notion as earlier in the week that the RBA will cut rates in November due to Westpac, Australia's second-largest mortgage lender, lifting owner-occupied mortgage lending rates by 20 bps, but this argument for a rate cut was rebuttaled by analyst at TD Securities earlier in the week that can be read here. Also, we have seen a turnaround in the prices of base metals and oil of late, while Gold is hedged against a Fed staying put and CPI's looking firm year on year.

AUD/USD levels

Technically, while below the 200 DMA at 0.7594 the outlook remains bearish.Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the technical readings favor the downside, with further declines seen on a break below 0.7250.

The 0.7200 level is key and closes below here could open up the case for a test of the September low at 0.6940 ahead of the 0.6905 recent low and the 0.6774 2004 low.
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