Aussie advances capped below 0.9700

FXstreet.com (Barcelona) - After failing to take out overhead resistance near the 0.9700 area, The Aussie is edging lower in Asia trade, falling 32 pips and sitting at 0.9631. Earlier in the session, we saw Private Sector Credit released out of Australia which came in at 3.1% actual vs. 3.0% forecast, but the print did not have a major influence on the pair.

According to analysts at NAB Global, “today’s RBA credit report for April showed monthly growth that was bang on our own and market expectations (both +0.3%) with the flavour of the report portraying the same story for households while for business borrowing marginally more hope. Housing credit growth has averaged 0.4% now for the past two years and that has continued through into April. There have been signs from the monthly housing finance approvals of a prospective lift in credit growth that is yet to show through. On the other side, mortgage rate reductions and a cautious home borrower suggests borrowers have used lower mortgage rates to amortise outstanding debt at a faster rate.”

From a technical perspective, short term moving averages on the daily chart remain in bearish set up with price being unable to clear the 9dma. The RSI (14) continues to show numerous “bullish divergences”, with price making new lows but momentum failing to confirm. This is a bullish development in the short term, which can help lead to a short term counter trend rally in coming sessions. However, the longer term path of least resistance still remains to the downside.