The Australian dollar would fall as low as 0.8591 during the week, which ended seven consecutive days of falling, before it bounced higher. The 0.8600 price level provided the first significant support for the pair in three weeks. However, with gold prices falling below $800 for the first time since December, we could see the AUDUSD heading towards the yearly low of 0.8500.
Fundamental Outlook For Australian Dollar: Bearish
- Business confidence held steady at a seven year low of -9. - Consumer Confidence rebounded 9% after a 6% decline the month prior, as fuel prices fell. - The Australian Wage Cost Index rose 1.2% in the first quarter, due to rising inflation and tight labor markets - Consumer Inflation Expectations fell from 5.9% to 4.9% in August, as fuel prices eased
The Australian dollar would fall as low as 0.8591 during the week, which ended seven consecutive days of falling, before it bounced higher. The 0.8600 price level provided the first significant support for the pair in three weeks. However, with gold prices falling below $800 for the first time since December, we could see the AUDUSD heading towards the yearly low of 0.8500. Although, confidence in the country has stabilized as oil prices have fallen, the lower inflation expectations will give the RBA room to cut rates at its next policy meeting. The central bank in its quarterly policy statement alluded to a possible easing when they stated that “significant moderation” in domestic demand will slow inflation and the “economic growth will be fairly slow in the period ahead”. The upcoming minutes from the RBA’s last rate decision will give us greater insight to the degree of easing that the MPC is intending to deliver. If the statements are far more dovish than expected we could see the Australian dollar fall further. The Westpac leading index and DEWR skilled vacancies will present little in the way of event risk that would slow the momentum. However, the 0.8500 could provide significant resistance as not only is it the yearly low, it is also the 61.8% Fibo level of the 0.7673 -0.9847 rally. -JR