The Aussie commenced last week with the latest Reserve Bank of Australia (RBA) Monetary Policy Statement reporting than an overvalued currency was hindering the Australian economy transition away from mining investment. The Aussie subsequently concluding trading on last Monday evening at its lowest value in over a fortnight, 0.9272.
Aussie losses refused to be the theme of the week though, with investors reacting positively to the announcement that second quarter Australian GDP grew at an annualised 3.1%. Additionally, monthly Retail Sales increased by 0.4% and discarded fears that decade high unemployment would lead to a decline in consumer spending.
The latest Australian employment report on Thursday morning represents a major risk to the Aussie next week. The previous month’s abysmal employment report sent warning signs towards investors that perhaps Governor Stevens was right with his previous comments that investors were underestimating a significant drop in the Aussie. If Thursday’s employment report follows the previous month’s pattern, the AUDUSD valuation will be under pressure.
The technicals on the Daily timeframe are suggesting that the pair is being traded in an ascending triangle. The Stochastic Oscillator and RSI are now moving closely towards the overbought boundaries, with the current price also coming close to touching the upper trendline of the wedge. As long as the Aussie follows the technicals, buying pressure should cool down.
This would no doubt please an RBA who are continually reiterating that the Australian currency remains overvalued. Potential support can be found at 0.9343 and 0.9314.
Source:: Aussie makes a comeback