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Aussie Holds 0.94 US, Eyes Initial Resistance

H.S. Borji
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Aussie Holds 0.94 US, Eyes Initial Resistance

The Australian dollar was relatively unchanged Thursday, as the forex market weighed the latest batches of US economic data amid a quiet Australian schedule.

The AUDUSD climbed to an intraday high of 0.9419 before settling at 0.9404. The trend line shows initial support at 0.9371 and resistance at 0.9427.

Weaker demand for the US dollar could keep support for the Aussie intact over the short-term, prompting a re-test of the initial resistance. The Aussie has been supported in recent weeks by stronger economic data. Speculators are forecasting the Australian currency to improve further over the short-term before falling back to pre-2008 levels by the end of the year, according to a recent survey conducted by the Australian Associated press.

The AUDUSD has advanced more than 1.3 percent over the past four-weeks. The gains have come amid signs the Reserve Bank of Australia is prepared to keep interest rates low as the economy recovers from a slowdown in mining investment.

The RBA held its benchmark lending rate at 2.5 percent at the June meetings.

The RBA will issue its next rate statement July 1.

The government’s 2014 budget is also expected to weigh on growth. Described as the toughest budget in nearly two decades, Australia’s latest economic blueprint seeks to cut the government’s budget deficit in half in the next year through a combination of tax hikes and spending cuts. These efforts are expected to shed thousands of jobs and boost the unemployment rate to 6.25 percent.

In US economic data, person income rose 0.4 percent in May, following a gain of 0.3 percent the prior month, the Commerce Department revealed today.

Personal spending advanced 0.2 percent in May, half the rate of forecasts, following no change the prior month.

In other trading, the Aussie declined sharply against the New Zealand dollar. The AUDNZD tumbled to a session low of 1.0720 before consolidating at 1.0734, declining 0.31 percent. The pair is testing initial support at 1.0738. Initial resistance is likely found at 1.0799.

Statistics New Zealand will report on the country’s trade balance Friday. New Zealand’s May exports are forecast to rise slightly from $4.5 billion to $4.56 billion. Imports are also expected to rise from $1.19 billion to $1.43 billion.

The AUDJPY declined 0.4 percent to 95.43 ahead of key Japanese inflation data. The Cabinet Office on Friday will report on national consumer prices for the month of June. According to Bank of Japan Governor Haruhiko Kuroda, Japanese inflation is expected to decline temporarily over the summer, but said there was no urgent need to boost stimulus efforts at this time.

The AUDJPY is testing initial support at 95.46. Initial resistance is likely found at 96.03.

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