September 14, 2021 15:28:01
After the dovish tapering last week by the RBA, the aussie looks to be struggling and heading for more downside ahead of Thursday’s unemployment data. A choppy risk mood is not helping while the US-China relationship is bubbling hot and cold under the surface. The recovery in iron ore, another key driver of AUD, has also stalled recently.
Unemployment is forecast to rise to 5% from 4.6% in July. The labour force is expected to lose 100k jobs with weekly payrolls highlighting the hit in New South Wales and Queensland. The spread of the Delta variant remains a key concern. Worse-than-expected data could force another delay in the RBA’s tapering plans. We note Governor Lowe’s recent speech in which he questioned the market pricing of rate hikes in 2022 and 2023.
AUD/USD breaks through near-term support
After plunging out of the mid-July and mid-August range below 0.73 to a low at 0.7105, AUD was oversold on a number of indicators – the RSI went through 25 and the lower Keltner band was pierced. An impressive rebound ensued with prices getting close to the 50% retrace level at 0.7497.
But the high at 0.7478 at the start of the month could be as good as it gets if risk sentiment remains subdued. The pair couldn’t sustain the rally above the August high at 0.7426 while the 50-day SMA around 0.7346 is currently struggling to act as support.
Today’s move lower sees that area now act as resistance with a weak close key to more downside. The 23.6% Fib level at 0.7290 is the first target for the bears, with 0.7222 below here.
AUD/CAD signals a recovery top in place
Similar in a few ways to the AUD/USD chart, the aussie/loonie cross was set in a long-term bear channel after topping out in February. The pair made new lows at 0.9110 before bouncing through the top of the descending channel. But a weekly “doji” candle last week signalled indecision and a stalled move.
Last week’s double rejection of 0.9374/77 with long upper shadows on the daily candles has seen sellers try to push below 0.93 support. The 50-day SMA and October’s spike low around 0.9250 is the first target if prices properly roll over, ahead of the cycle lows seen in mid-August.
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