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20 Feb 2014
Why AUD/USD risk is to the downside?
FXStreet (Bali) - The Australian Dollar approaches China's HSBC Flash PMI (1.45 GMT) having retained its top-heavy outlook, as sellers keep pressing against the 0.8990/0.90 support area.
In the last 48 hours, there has been some fundamental and technical developments that should warrant caution to buyers out there, while should have encouraged a re-group of sellers for a potential break lower. Below are the fresh reasons that may weight down on the Aussie this Thursday.
- Given the dismal MNI China's Business Sentiment from Wednesday, which came at a 5-year low, it suggests risk is skewed to the downside on today's data.
- Given the strong sell-off in the Canadian Dollar overnight, the possibility of such bearish sentiment extending to the Australian Dollar (the other major commodity currency) is on the rise.
- The FOMC minutes has reassured market participants that the bar to stop tapering has been set quite high. If Asian players have the same "hawkish" interpretation by weakening AXJ currencies, it will add pressure to the Aussie.
- The moment the AUD/USD breaks above the 0.9080 resistance, expect the RBA to turn (again) more aggressive on talking down the currency. Since AUD traders may be anticipating such scenario, they probably prefer to play a range game below such level. Besides, multiple failures to regain 0.9040 suggests sellers well camped...
Based on the above factors, it suggests selling AUD with conviction on bad HSBC PMI Chinese data, while probably fading the upmove on an upbeat number, barring any major surprise. The conclusion is that AUD risks look to be skewed to the downside for Thursday's Asian session. To the downside, key support is seen at 0.8920/30 (Feb 13 low).
In the last 48 hours, there has been some fundamental and technical developments that should warrant caution to buyers out there, while should have encouraged a re-group of sellers for a potential break lower. Below are the fresh reasons that may weight down on the Aussie this Thursday.
- Given the dismal MNI China's Business Sentiment from Wednesday, which came at a 5-year low, it suggests risk is skewed to the downside on today's data.
- Given the strong sell-off in the Canadian Dollar overnight, the possibility of such bearish sentiment extending to the Australian Dollar (the other major commodity currency) is on the rise.
- The FOMC minutes has reassured market participants that the bar to stop tapering has been set quite high. If Asian players have the same "hawkish" interpretation by weakening AXJ currencies, it will add pressure to the Aussie.
- The moment the AUD/USD breaks above the 0.9080 resistance, expect the RBA to turn (again) more aggressive on talking down the currency. Since AUD traders may be anticipating such scenario, they probably prefer to play a range game below such level. Besides, multiple failures to regain 0.9040 suggests sellers well camped...
Based on the above factors, it suggests selling AUD with conviction on bad HSBC PMI Chinese data, while probably fading the upmove on an upbeat number, barring any major surprise. The conclusion is that AUD risks look to be skewed to the downside for Thursday's Asian session. To the downside, key support is seen at 0.8920/30 (Feb 13 low).