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7 Jan 2014
AUD/USD short cover rally falters, 0.8920 daily kijun eyed
FXstreet.com (Bali) - AUD/USD short cover rally off 0.8820/30 came to an abrupt halt at the confluent 0.90 resistance, where renewed offers have so far successfully pull price down towards 0.8925.
While the exchange rate is currently being underpinned by the daily kijun, coming at 0.8920, it is worth noting that the negative AUD reaction to a better-than-expected trade balance number in Australia, offers some interesting clues on what might start to be renewed worsened sentiment towards the Aussie.
According to John Noonan, Head of IFR Markets, "AUD/USD is now showing signs of fatigue as short covering starts to dry up, with model funds the main sellers during the Asian session." The Analyst sees a break and close below 20-day MA, today at 0.8922, to potentially open up next target of 0.8835/45.
From a fundamental perspective, according to Ilya Spivak from DailyFX: "The Aussie’s ability to recovery depends on the degree to which investors have already priced in the “tapering” cycle for the months ahead," he said.
Spivak adds: "Net speculative short positioning on US 10-year Treasury bond futures has been unwinding having hit a 19-month high last month, suggesting a period of digestion may already be underway. This means only an outsized positive surprise on the US data front that accelerates QE cutback bets stands to materially wound the Australian unit in the near term."
While the exchange rate is currently being underpinned by the daily kijun, coming at 0.8920, it is worth noting that the negative AUD reaction to a better-than-expected trade balance number in Australia, offers some interesting clues on what might start to be renewed worsened sentiment towards the Aussie.
According to John Noonan, Head of IFR Markets, "AUD/USD is now showing signs of fatigue as short covering starts to dry up, with model funds the main sellers during the Asian session." The Analyst sees a break and close below 20-day MA, today at 0.8922, to potentially open up next target of 0.8835/45.
From a fundamental perspective, according to Ilya Spivak from DailyFX: "The Aussie’s ability to recovery depends on the degree to which investors have already priced in the “tapering” cycle for the months ahead," he said.
Spivak adds: "Net speculative short positioning on US 10-year Treasury bond futures has been unwinding having hit a 19-month high last month, suggesting a period of digestion may already be underway. This means only an outsized positive surprise on the US data front that accelerates QE cutback bets stands to materially wound the Australian unit in the near term."