AUD/USD – Choppy. Dollar slump overnight lifted the pair 30 pips higher
and was last seen around 0.7360. The daily MACD continues to show
some deceleration in the bullish momentum but the clearance of the
0.7328-support is still required for further downside towards 0.7216.
Directional bias is unclear at this point but choppy action is certain.
Next support is seen around 0.7325 ahead of the next at 0.7260 while
topsides are capped at 0.7440. We reiterate that the AUD outlook
remains challenging on multiple fronts. Weak investments in mining and August 20, 2015 3
GM Daily
resource sectors as well as the lack of traction in non-mining business
investments are expected to weigh on growth. Falling commodity prices
(iron ore, copper) as Chinese demand slows could weigh on Aussie terms
of trade. Taken together, there is little to be positive in the AUD
especially against an environment of monetary policy divergence
(whereby Fed is likely to tighten in coming months while RBA remains on
neutral to mild easing bias). Medium-term down-trend remains intact,
with next big support around 0.72 levels (trend-line support from the
low in 2001 and 2008). Monthly momentum remains bearish bias. We
caution that a break below this long-term support could expose AUD to
further downside beyond 0.70
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