Daily Outlook

AUD/USD tested 0.7700 overnight but failed to break above as the rally stalled and we reversed gently back to 0.7670.

The outlook is strong but the USD weakness seen post ISM Services Data on Tuesday took a breather in the US session against most pairs and this capped the Aussie’s Rally.

Another factor that limited the AUD/USD upside in recent days has been the relentless selling on the AUD/NZD cross which has hit multi year lows at 1.0265 overnight. The NZD (kiwi) has been the strongest currency in the developed market recently due to its high relative yield at 2.0% interest rates still.

AUD/NZD has never been below 1.000 since the two countries floated their currencies in the 1980’s so the current downtrend has this huge level in focus if the trend continues. The potential for the AUD/NZD to break below 1.000 has generated a lot of interest in New Zealand and especially from the RBNZ which has intervened as recently as November 2014.

AUD/NZD 9/8/2016 12:38 AM  Trend daily chart (=)  Trend weekly chart (=) AUD/NZD intraday: the RSI is oversold 1.0310 is our pivot point. Our preference:the downside prevails as long as 1.0310 is resistance. Alternative scenario: above 1.0310, look for 1.0330 and 1.0340. Comment: the RSI is below 30. It could either mean that the pair is in a lasting downtrend or just oversold and therefore bound to retrace (look for bullish divergence in this case). The MACD is below its signal line and negative. The configuration is negative. Moreover, the pair is trading under both its 20 and 50 MAs (respectively at 1.0329 and 1.0358). Supports and resistances: 1.0340 ** 1.0330 * 1.0310 ** 1.0310 1.0294 last 1.0270 1.0260 ** 1.0250 * 1.0240 **

Ticker : AUDNZD