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AUD/USD returns below 0.8600

FXStreet (Edinburgh) - The Aussie dollar is now retracing the earlier upside near the 0.8620 handle, taking AUD/USD back to the 0.8570.65 band.

AUD/USD softer, USD wakes up

After reaching 2-day highs fuelled by auspicious results from the Private Capital Expenditures in the Australian economy during the third quarter, spot is now deflating to the area of 0.8560 following a better tone from the US dollar. The AUD also found its demand boosted after New Home Sales tracked by HIA expanded 3% on a monthly basis during October, leaving behind September’s flat reading. In the view of strategist Sean Callow at Westpac, “Pessimism over China’s growth outlook is unlikely to dissipate quickly, with any improvement likely to be gradual. This should cap AUD/USD rallies around 0.8700/20… If AUD/USD does retest lows under 0.85, it should prove short-lived”.

AUD/USD key levels

At the moment the pair is advancing 0.12% at 0.8561 with the next resistance at 0.8619 (high Nov.25) ahead of 0.8648 (10-d MA) and finally 0.8673 (21-d MA). On the flip side, a breakdown of 0.8480 (low Nov.26) would expose 0.8450 (low Jul.7 2010) and then 0.8315 (low Jul.1 2010).

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