Forex: AUD/USD looks bullish intraday

on May 20, 2013
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Since reaching 0.9792 during today’s Asian trading the AUD/USD pairing has again twice been pushed to test the daily high, but traders’ attempts have found resistance. On the 15-minute chart an ascending triangle formation will soon be completed. This is a continuation pattern and if the 0.9792 line gets broken to the upside, a deeper correction should come into play and guide the pair towards 0.9860 and 0.9900, followed by 0.9920, 0.9940 and 1.0000. On the other hand if the USD’s strength prevails and the 0.9712 low gets broken, the first target level should be at 0.9588 (low of May 27th, 2012).

Copper prices on the LME have today gained 3.3 percent to $7329.5/MT. Aluminium prices have increased by 2.1 percent to $1840.5/MT.
Mansoor Mohi-uddein, Head of Foreign Exchange Strategy at UBS, comments: “For the first time in a year, the Australian dollar is trading back below parity against the US dollar. We expect the currency to stay heavy against the greenback in a 0.95-1.00 range now given the Reserve Bank of Australia is likely to cut interest rates again following this month’s 25bps reduction in its cash rate to 2.75%. Domestic data continues to be soft including business conditions and wages. In Q1 wages grew at 0.7%q/q the second lowest reading in thirteen years.” He also added that “in the week ahead the RBA releases its April meeting minutes. These will cast more light on the prospects of a follow up interest rate cut. In addition a potentially bigger risk to the currency is approaching with the publication of the quarterly capital expenditure report on May 30. If Australia’s investment boom wanes more rapidly than expected, then the central bank may have to ease more aggressively. That could cause the currency to weaken sharply back towards levels between 0.80-0.90 that are consistent with underlying fair value against the US dollar”.

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