Aussie Dollar Faces Challenges
Today’s Spotlight Market
Weakening base metal prices have taken their toll on the Australian Dollar, which has stalled near the 0.9000 level.? The Aussie Dollar has also stalled due to the fact that traders have been averting risk and growth currencies.? Currency traders are also keeping a close eye on the recent drop in the Chinese Yuan?s exchange rate.? There is speculation that the People?s Bank of China was the driver of the Yuan?s decline, suggesting the central bank may be looking at widening the price band of the currency.? A weaker Yuan has the potential for a weaker Aussie Dollar. ?
Fundamentals
The slowing of the Chinese economy, especially the housing market, has traders concerned that it could slow the pace of the Australian economy.? The two nations are key trade partners, with Australia producing much of the raw materials used in industry and construction in China.? The Australian government is expected to reduce its spending, which is expected to have a moderately negative impact on the local economy.? The Reserve Bank of Australia is expected to maintain looser monetary policy and keep interest rates steady.? Mining has seen a fall-off in investment, which is expected to continue.? BHP Billiton, the world?s largest mining company, withdrew from developing a new coal terminal project.? The company is, instead, focusing its spending on more profitable projects, while closing loss-making mines, cutting staff and postponing new projects.? This could test the Australian government to keep unemployment rate near multi-year lows of 5.75 percent.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the March Australian Dollar hitting the proverbial wall near resistance at the 0.9020 level.? If prices can manage rallying through 0.9020, the Aussie Dollar may test the 0.9250 level.? The RSI indicator was showing overbought levels, which may have contributed to the lackluster performance in recent sessions.
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