Good day forex people! Here’s an update of the AUDUSD pair which I posted back on June 22 (click here to see my previous entry). Anyway, the Aussie bullish run was cut short last night due to a slide in the global equities markets. The Aussie skidded from 0.8709 to settle at 0.8463 against the greenback in yesterday’s bloodbath. Looking at the pair’s 4-hour canvas, you can see that it has retreated even past the neckline support of its previous double bottom after reaching a high of 0.8859. The only net that is keeping it afloat now, in my view, is the 0.8500 psychological support. If this number gives way, the Australian dollar could further return its gains over the USD and the pair could fall towards 0.8300 or 0.8100. However, given the oversold conditions, traders could view the AUD as ‘cheap’ which could lead them to push it back higher. If the fear in the market dissipates and buying resumes, the pair could at least reach for the resistance just below 0.8800.
The Aussie’s slide yesterday was due China’s leading economic indicators for April cooled down 0.3% after posting a jump of 1.7% during the month prior. This unexpected figure stirred some concerns that the present global growth may not be as strong. Remember that China, as of now, is the world’s second largest economy. With the ongoing fiscal crisis in Europe and the US’s mixed economic standing, a dip in China’s economy could further add a lot of bearish pressure on the markets.
China also has a big impact on Australia because the latter is one of the former’s major trading partners. A dip in China’s economy could mean lesser exports, hence, lesser growth for Australia. Tomorrow (July 1), China is set to publish its latest manufacturing PMI figure. The index is also seen to have cooled to 53.2 from 53.9. If such decline indeed happens, the Aussie could once again take a hit. On separate news, Australia will likewise release its May building approvals and retail sales. Building approvals are projected to hold steady after falling sharply by 14.8% the other month. Retail sales on the other hand, are expected to have gained again by 0.3% on top of the 0.6% rise in April. Upbeat figures from these two accounts could support the Aussie while bleak numbers could obviously push it lower.