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Aussie Rallies to Test 0.94 US

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Aussie Rallies to Test 0.94 US

The Australian dollar advanced further against its US counterpart Wednesday, threatening to retake 0.94 amid improving Australian consumer confidence.

The AUDUSD peaked at 0.9406, its highest level since April 15. The pair consolidated at 0.9388, advancing 0.18 percent. The trend line shows initial support at 0.9346 and resistance at 0.9392. Above this level, 0.9412 and 0.9438 are the next technical targets.

The Aussie has notched up four consecutive days of advances against the US dollar.

On Wednesday the Melbourne Institute and Westpac Banking Corporation said Australian consumer confidence rose in June, advancing 0.2 percent after a 6.8 percent decline the prior month. The report came one day after the National Australian Bank said business confidence held steady in May, surviving the government’s “tough budget.”

However, overall business conditions declined slightly in May, as employment and profits remained soft. The NAB said that, while conditions varied significantly across industries, the drop in business conditions suggest “little scope for improvement in domestic demand.”

On Thursday the Australian Bureau of Statistics will present key data on employment for the month of May. Australian employment is forecast to have increased 10,000 in May, following a gain of 14,200 the prior month. The unemployment rate is expected to nudge up slightly to 5.9 percent.

Stronger than forecast employment figures have been a catalyst for the Aussie’s strong performance in recent months. Unemployment unexpectedly declined earlier this year as full-time work surged. In February Australia posted the biggest rise in full-time employment in more than two decades, easing concerns about the labour market.

However, the latest budget warns the country’s unemployment rate will rise next year and stay elevated until mid-2016. Budget cuts are expected to cost the Australian economy thousands of jobs as the government looks to slash its deficit in half over the next year.

The US dollar remained well supported Wednesday as investors awaited the latest budget statement from the Financial Management Service. The US dollar index was steady at 80.76.

The Commerce Department on Thursday will report on business inventories and retail sales. Business inventories are estimated to have increased 0.4 percent in April. Retail sales are expected to have advanced 0.6 percent in May.

In other trading, the Aussie declined slightly against the New Zealand dollar. The AUDNZD declined 0.09 percent to 1.0982, rebounding from an intraday low of 1.0961. Initial support is likely found at 1.0975 and resistance at 1.10.19.

The Reserve Bank of New Zealand on Thursday is expected to raise its benchmark lending rate from 3 percent to 3.25 percent. This would mark the RBNZ’s first rate hike of 2014.

The Aussie strengthened further against the euro, which is still reeling from the European Central Bank’s latest policy decision. The EURAUD declined 0.33 percent to 1.4408. The pair is testing initial support at 1.4411. Initial resistance is likely found at 1.4524.

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