24 Jul 2013
AUD/USD - 0.9330 impregnable supply, large demand at 0.9250
FXstreet.com (Barcelona) - The AUD/USD is presently exchanging hands just above bids-sensitive zone at 0.9250, after sellers on China negative news eventually outnumbered the ignored Australian low CPI.
Market cares way more on China
The recent increase in participation in the AUD/USD is very telling about the intentions of the market. The Aussie initially rose after players shrugged off a still depressed CPI read 'down under', which confirms the pricing of a rate cut in the swap rate markets is high enough to care much about greater chances of another cut by the RBA.
Interestingly, it was right after an 11-month low in the China HSBC PMI that worked wonders for sellers, with volumes spiking and the rate back below 0.93 to make a quick return towards the origin of the first rebound post the CPI print, suggesting interest to buy Aussie remains around. Market sources refer to the area sub 0.9250 as one where large demand for AUD from real money has been noted, not fully confirmed yet but the constant bounces suggest caution to be sellers after the big slide.
Range set to extend near term
The reversal in the AUD/USD, which comes after stops above 0.9310 got tripped, confirms that 0.9330/45 remains a sellers strong-hold, well protected ever since the July 26 first test. Chances are that an extension of the 1-month long range 0.90-0.9330/45 continues for the time being, as the 'summer drums' loom, and interest to reveal the next direction lacks clear catalysts, at least until the next RBA rate meeting in 2 weeks time. Risk from the Fed not seen until Jackson hole late Aug as next FOMC is not expected to provide additional hints on absence of U.S. data to decide on monetary policy course.
If the assumptions of a range extension is perceived as an appropriate context by the market near term, then it makes sense to think that the main risks for the pair this week appear to be to the downside, as the exchange rate continues to show one topside failure after another. Watch for the 0.9240/50 level as it will most likely prove key today.
Market cares way more on China
The recent increase in participation in the AUD/USD is very telling about the intentions of the market. The Aussie initially rose after players shrugged off a still depressed CPI read 'down under', which confirms the pricing of a rate cut in the swap rate markets is high enough to care much about greater chances of another cut by the RBA.
Interestingly, it was right after an 11-month low in the China HSBC PMI that worked wonders for sellers, with volumes spiking and the rate back below 0.93 to make a quick return towards the origin of the first rebound post the CPI print, suggesting interest to buy Aussie remains around. Market sources refer to the area sub 0.9250 as one where large demand for AUD from real money has been noted, not fully confirmed yet but the constant bounces suggest caution to be sellers after the big slide.
Range set to extend near term
The reversal in the AUD/USD, which comes after stops above 0.9310 got tripped, confirms that 0.9330/45 remains a sellers strong-hold, well protected ever since the July 26 first test. Chances are that an extension of the 1-month long range 0.90-0.9330/45 continues for the time being, as the 'summer drums' loom, and interest to reveal the next direction lacks clear catalysts, at least until the next RBA rate meeting in 2 weeks time. Risk from the Fed not seen until Jackson hole late Aug as next FOMC is not expected to provide additional hints on absence of U.S. data to decide on monetary policy course.
If the assumptions of a range extension is perceived as an appropriate context by the market near term, then it makes sense to think that the main risks for the pair this week appear to be to the downside, as the exchange rate continues to show one topside failure after another. Watch for the 0.9240/50 level as it will most likely prove key today.