Aud/usd

Reviewing the last year on the AUD/USD we notice the pair is poised to make new lows for 2008. Using a retracement analysis from August 2007, the pair has broken the 61.8% retracement early this trading week. The chart below shows the truly drastic nature of the Aussie sell off, and although it is currently trading above the 61.8% retracement, another break below could lead to much lower prices as the markets continue to price in further easing by the Reserve Bank of Australia.

Examining the Australian dollar and USD cross from the lows made approximately 1 year ago in August of 2007, we notice many critical levels, including the more immediate 61.8% retracement, as well as the full retracement possibly further down the road. The 61.8% retracement has provided some support for the pair as it moved toward the highs (highlighted below) and might provide support and consolidation on the way down. The pair has already traded off over 1200 pips in less than a month.

The Aussie has held technical levels throughout the trading day. On the chart below you can notice the AUD/USD move toward the 61.8% retracement and bounce back to 50% and hold. The retracement analysis below is based on lows from June 12th and highs from July 15th.

The AUD/USD chart we have been publishing the last few trading sessions continues to trade in a range around the 200 day moving average, awaiting some direction possibly from the USD. An earlier report in regards to Australia's largest bank, the National Bank of Australia writing down losses associated with their US CDO (collateralized debt obligation) book, the loss was 90% of the CDO book value, a total write down of $830M AUD. The pair is currently trading north of support at the 61.8% Fibonacci retracement level.

The AUD/USD has continued through the 96 handle earlier in trading as commodities continue to trade lower. The 96 handle continues to be a key level, as we straddled that point throughout the trading day. Another break through on commodity sell offs and/or a stronger USD could provide a push toward support.

Over the last few trading sessions we have examined the Aussie against the US Dollar in the narrowing channel featured below. The positive US Dollar move today coupled with a 17yr high Australian inflation report, without any rate hike projected by the RBA, has caused the AUD/USD to break the channel and subsequently the .97 handle. Now we notice the AUD/USD continuing to trade weaker toward the .96 short-term support level and the 200 day moving average. It will be interesting to see the markets reaction as the pair approaches this critical level.

The AUD/USD chart posted yesterday has continued to hold our channel to the pip, as it traded up the support slope since our last post regarding the Aussie. The 50 day and 200 day moving averages continue to provide support for this pair.

The Aussie and US Dollar currency pair has been in a bullish upward channel since the beginning of 2008. A microcosm of that trend has continued into the summer months, with the channel displayed below seemingly headed to an apex. The strength of the Aussie against the US Dollar does have a lot to do with the general weakness of the USD across the board, but the strength of the Aussie at these levels can also be attributed to their commodity based economy reaping the benefits of surging prices. It will be interesting to see how much more steam this pair has with a lot of the bad US economic news already built into the market and commodity prices trading off their highs.

AUD PPI (Producer Price Index)

Out at 1.0%

Expected at +1.6% QoQ

Prior +1.9%

As detailed in the chart below, the Aussie has broken the channel to the downside noted on our last AUD/USD chart (7/16). As the pair hovers above the 97 handle and with the 50 day moving average crossing the 100 day moving average lower, a break through 97 could lead the pair toward support at 96.01.