Aussie Crushed by Weight of Metal Prices
Today’s Spotlight Market
The Australian Dollar suffered heavy losses versus the greenback in recent sessions, driven by lower commodity prices. The recent strength of the US Dollar has triggered a wave of buying in the currency, at the expense of higher yielding currencies, such as the Aussie Dollar. The Federal Reserve is expected to begin raising interest rates next year, which was a departure from the low interest rate environment the US has been in for the past several years.? Because of the shift in interest rate sentiment, currencies that have performed well due to favorable interest rate parity have suffered the most in recent days.???? ?
Fundamentals
The recent weakness in the Australian Dollar has been a welcome development for the Reserve Bank of Australia. The central bank has favored a lower exchange rate to bolster their economy.? Australia is a supplier of raw goods to the region and a weaker currency would make those exports more attractively priced. Demand for base metals, especially from China, has been lackluster, at best, which may keep downward pressure on the Aussie.? Currency traders may want to keep an eye on Chinese metal imports to gauge if the softening of the Aussie helps exports.?? Traders may also want to keep an eye on today?s retail sales data, which will likely have an influence on the Fed?s decision making process.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the December Australian Dollar breaking down below the 0.9200 support level.? Prices have also broken through minor support around 0.9030 in early trading.? The next fairly significant support level can be found around the 0.8875 level.? Recent price movement has resulted in prices falling below the 200 day moving average.? The RSI indicator is now showing oversold technical conditions, which may be seen as supportive in the near-term.? The Aussie Dollar is heading into an area with heavy chart congestion, which may act as a buffer on the downside.?
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