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Australian Dollar Fundamental and Technical Analysis

Posted by Joseph Trevisani on Aug 8, 2013 4:38:00 PM

The overall weakness in the Australian Dollar since April has been caused by an unexpected slowdown in the Chinese economy, Australia's biggest export market, which began to be reported in mid-April.

ScreenHunter 1630 Aug. 08 16.52

Chinese Economic Statistics

Exports y/y: February 21.8%; March 10.0%, expected 11.7%, reported on April 9th; April 14.6%; May 1.0%; June -3.1%. They have revived to 5.1% in July.

Imports y/y: February -15.0%; March 14.2%, reported April 9th; April 16.8%;  May -0.3%; June 0.7%; July 10.9%.

Two other major economic statistics were weaker than anticipated and reported in mid-April also.

Industrial production y/y: December 10.3%, (no figures for January and February); March 8.9%, expected 10.1%, reported on April 14th; April 9.3%, May 9.2%, June 8.9.

GDP y/y: Q1 7.7%, expected 8.0% released April 14th, Q4 2011 7.9%, 

The Australian Dollar peaked on April 11 and the current well defined channel is dated to then.

The purchasing managers index (PMI) showed increasing weakness throughout the spring and helped to keep the Australian Dollar under pressure.

Official Manufacturing PMI: March 50.9; April 50.6, expected 50.7, reported on April 30th; June 50.1; July 50.3.

Services PMI: January 56.2; February 54.5; March 55.6; April 54.5, reported May 2nd; May 54.5; June 53.9; July 54.1.  HSBC's numbers show a similar pattern though the range is lower. They have July services PMI at 51.3 and manufacturing at 47.7. 

Technical Levels

The Aud has been in a strong well defined down channel since the turn lower on April 11th. Several highs in late July (24th, 26th, 29th) halted at the upper border and trading on the 30th then turned back into the center of the channel. Today's high, 0.9135,  stopped just short of the upper limit which is now at 0.9152. The April 11th (1.0599)to August 8th (0.8848) move has, as of yet, seen no appreciable retracement.

0.9291 55 day moving average

0.9195  Offers
0.9160  Large stops
0.9150  Good resistance, offers, channel top
0.9119  21-day moving average

Current Price 0.9102

0.9093 14 day moving average
0.9020 Medium support, bids

0.9000 Medium support, bids
0.8950 Good demand, bids
0.8900 Good demand, bids, stops




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