It seems the Australian dollar cannot catch a break. This time it was assaulted by sellers after disappointing retail sales figures out of Australia, despite better than expected Chinese Manufacturing PMI figures earlier in the session and news that China is loosening even more property restrictions. The path of least resistance for the battered commodity currency appears to still be firmly to the downside.
However, while AUDUSD was hit hard by today’s aussie weakness, it wasn’t a fatal blow. The pair is holding above a key support zone around its four-year low, albeit only just. A break of this support level around 0.8660 may spark another bout of AUDUSD weakness in the near-term, but we would be mindful of a false breakout.
The news that sparked this sell-off was an unexpected drop in retail sales growth, as well soft second-tier housing data for September (a measure of residential property price growth showed only a 0.1% gain over the month). Retails sales only rose 0.1% in August, meaningfully less than an expected 0.4% increase. Today’s data has eroded some confidence that had built up on the back of recent encouraging figures from the ground floor of Australia’s economy. In saying that, one month of data isn’t enough to completely rule out the consumer consumption space.
Technical view: GBPAUD
The sell-off in the Australian dollar has pushed GBPAUD to an important short-term resistance zone just below 1.8700. The pair has been rejected by this level numerous times and a confirmed break here may give GBPAUD the push it needs to reach the top of its upward trading channel (see chart). On the downside, we are watching the base of the pair’s upward trend and a support zone around 1.8500.
Source: FOREX.com
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