AUD / USD: tomorrow - a decision the RBA's interest rate _29/02/2016

Trading recommendations

Sell ​​Stop 0.7090. Stop-Loss 0.7135. Take-Profit 0.7000, 0.6975, 0.6950, 0.6910, 0.6860, 0.6810

Buy Stop 0.7180. Stop-Loss 0.7150. Take-Profit 0.7225, 0.7300, 0.7330, 0.7510


Technical analysis

In the past two weeks, the AUD / USD traded mostly in a range between the support level 0.7125 (EMA50 daily chart) and the resistance level 0.7225 (EMA144) and today the price rose slightly in the correction to the strong decrease on Friday.

On the daily chart indicators OsMA and Stochastic is moving to the “Sell”.

Fixing prices below support level 0.7125 (EMA50 daily chart EMA200 on 4-hour chart) create conditions to further reduce the levels of 0.6975 (low of February), 0.6910 (Fibonacci level of 0% correction to the last wave of decrease in pair in July 2014), and further, to the key support level of 0.6350, 0.6000 (lows 2008 - 2009).

Reverse the scenario associated with the breakdown of the resistance level 0.7225 and rising to the resistance level 0.7330 (EMA200 on the daily chart).

However, short positions, based on the fundamental background are preferred for the pair AUD / USD in the medium term.


Overview and Dynamics

The People's Bank of China today lowered the reserve requirements for banks by 0.5 percentage points. Financial markets in general greeted the news positively. National Bank of China's decision will contribute to maintaining a high level of liquidity in the financial system. World stock indices and commodity currencies, including the Australian dollar reacted growth.

On the other hand, the negative news coming from Australia itself. Thus, according to data released today morning, the profits of companies in Australia in the 4th quarter decreased by 2.8% (forecast -1.8%).

Companies arrived reduction can talk about reducing the level of consumer spending and activity of the country's imports and exports.

Surprisingly, unemployment grew in January (6% versus 5.8% in the previous month) recalls the fragility of the labor market recovery in Australia and restrains the demands of employees for higher wages. Thus, the index of wages in the country in the 4th quarter amounted to 0.5% (compared to data for the 3rd quarter 0.6%).

Inflation in Australia has decreased in February by 0.2% (versus growth of 0.4% in January).

On the last weekend meeting of G20 countries have expressed concerns about the process of global economic recovery, which may a negative impact on commodity prices and quotations of commodity currencies, including the pair AUD / USD.

According to the RBA board member John Edwards, a fair rate for the pair AUD / USD is close to the mark of 0.6500. According to some experts, the Australian dollar is overvalued by about 10%.

Tomorrow at 03:30 (GMT) the RBA will publish a decision on interest rates. And if the bank will not lower it now, it could happen later, as many economists expect, at least twice - in May and July, according to the forecast - to 1.5%.

Thus, the pair AUD / USD will remain under pressure in the medium term.