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AUD/USD: back to square one, offered at 200-hour SMA

  • AUD/USD: a tug of war between bears and bulls in NY as US dollar remains directionless. 
  • AUD/USD supported ahead of yesterday's low after failing at 200-hour SMA.

AUD/USD has been two-way business in NY rallying and offered the following levels as the dollar struggles to capitalise on positives. Currently, AUD/USD is trading at 0.7566, down -0.11% on the day, having posted a daily high at 0.7577 and low at 0.7557. 

The USD has been struggling to capitalise on its status as a “growth currency” in recent weeks. Our US surprise index has posted a solid bounce in the last four months, putting it in sight of the “Trump trade” highs set in early 2017. Yet, over that same period the USD index is overall flat," explained analysts at Westpac added that it’s not entirely obvious what is driving this curious price action but our analysis suggests it must be “negative developments” on the US side that affect the currency more than US yields.  It may be a growing uncertainty premium around Powell, tax cuts and/or North Korea that is specifically affecting the currency more than fixed income yields."

Recent domestic data for AUD

Meanwhile, domestically for the Aussie, headline Q3 capex came in as expected at 1% and the figure that feeds into GDP. The estimates point to non-mining sectors driving capex activity going ahead, the data reinforcing the RBA’s message. Then, the number of Building Approvals for Oct rose 0.9%/m, better than the mkt f/c for a 1% drop and private sector credit rose +0.4%/mth in Oct, led by a +0.5%/mth growth in housing (owner-occupied +0.6%, investor loans +0.2%). However, the data has not been regarded as a game changer for the RBA, expected to keep its cash rate at 1.5% next week, (Dec 5).

Gold slumps to 2-week lows near $1270 as Wall Street surges

AUD/USD levels

AUD/USD dropped to 0.7557, the Asia low, during the European am after meeting an Asian high of 0.7592. Then, the rally to 200-hour SMA was capped and price forced back today's low so far in NY that is just above Wednesday's eight-day low at 0.7552. On a break lower, additional supports are 0.7532 as the recent 5mth low and 0.7500, an option barrier level. to the upside, a break of the H&S neckline level at 0.7660 is key where the 13th Nov high of 0.7665 is located as a minor Fibo resistance ahead of 0.7695/0.7700.

EUR/USD: what is driving this curious price action? - Westpac

Analysts at Westpac explained that the bottom line is that the USD has been struggling to capitalise on firming data and yield support. Key Quotes:
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