Recession Fears Weaken The ?Aussie?
Today’s Spotlight Market
The Australian economy received a bit of good news on the employment front as the Australian Bureau of Statistics (ABS) reported that 24,100 jobs were created in October, and the unemployment rate remained steady at 6.2%. The improvement is especially impressive as all the gains were seen in full time employment which rose by 33,400.? However, traders have become a bit gun-shy regarding the reliability of the employment data of late as the ABS has been forced to issue several revisions to the employment data due to issues involving seasonal adjustments.???? ?
Fundamentals
Currency Bears have traveled to the ?Land Down-under? as the Australian Dollar (Aussie) had fallen to 4 year lows against its Dollar cousin in the U.S. The Australian economy has faced some headwinds stemming from the end to the so called ?commodity boom?, caused by the once insatiable appetite for commodities from Asia and especially China.? Some analysts expect the Australian economy to grow by less than 2% in 2015, with the majority of economic growth coming from exports. Domestic growth has become anemic as spending by both corporations and individuals have slowed, as fears of a recession have led to increased savings and away from investment spending. These economic growth fears have triggered calls for the Reserve Bank of Australia (RBA) to lower interest rates from its current record low of 2.5% to help stimulate the slowing economy. The potential for lower interest rates in 2015 is helping to keep pressure on the Aussie, especially against the U.S. Dollar where traders believe the Federal Reserve will begin to hike interest rates by mid-year. ?
Technical Notes? -? View Today’s Chart
Looking at the weekly continuation chart for Australian Dollar futures, we notice prices trending lower since all-time highs were made back in 2011. Prices are now below both the 20 and 200-week moving averages, and the 14-week RSI has moved into oversold territory with a current reading of 28.67. For those with a long-term prospective, we should note that the market is still in a uptrend from the major lows made back in 2001, and it is conceivable the current 3-year long bear move is nothing more than a ?bull flag? in a multi-year bull market cycle for the Aussie. The next major support level is seen near the 2010 lows of 0.8065, with resistance found just above the 0.9450 level.
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