See the latest Australian dollar analysis here:
I haven’t posted much trading style stuff recently as the Aussie has been trading a range and I’ve been away from the desk often on business but for those with a trading bent today offers a potential opportunity.
As you can see from the chart above last weeks move from just below 1.04 (range bottom) peaked below 1.08 (range high) and is slipping back toward 1.07 as we write.
Yesterday’s data was terrible for the Aussie as it takes away any chance of th RBA hiking anytime soon and speaks of an economy that is clearly slowing. The Major Bank senior economists are all largely walking away from their calls for rate hikes and pushing into the nether region of 2012.
So, that’s 2 of the 3 drivers in our model now negatives – or potential negatives.
Equally the AIG Service Sector PSI just out showed that this sector of the economy remains sluggish.
The importance of this run of data is that even though we, here, have been talking about it for a while now and rebutting some of the more ridiculous talk of a booming economy the weak data is now only really gaining acceptance and noteriety in the MSM or the Punditary and with investors and traders.
Late to the game they may be, but this has an impact on Aussie related sentiment that is only related to the Aussie (IE not related to USD weakness or EUR strength). Which undermines the Aussie, all other things equal.
But this is largely a technical view based on the price action and the fact that the RBA could be expected in the Statement at 2.30 pm today to reflect the recent deterioration in data, even if I’d posit they’ll be more upbeat about the Greek resoultion.
So a Dovish RBA today could see the Aussie under pressure. The blue line on the chart is at 1.0675 and represents a potential hourly head and shoulders. If it breaks I’d expect a to 1.0540 probably lower.
This blog is for information only and does not constitute advice. Neither Greg McKenna, Lighthouse Securities nor MacroBusiness has taken your personal circumstances, objectives or financial situation into account. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.