AUD in strife on Greece saga

While most of the action in today’s trade has been around euro crosses, the local currency has actually been one of the more significant underperformers.

Click to enlarge

AUD/USD gapped below $0.7500 at the open and traded at the lowest since May 2009 at $0.7450. The risk-off tone seems to be working against the AUD and, judging by the sharp falls in iron ore, the AUD could be in for further weakness.

The Reserve Bank of Australia meets tomorrow and no doubt this latest dip in the AUD/USD will be well received. While no change in policy is expected, it’ll be interesting to see if the uncertainty in Europe and China will deserve a comment. These situations present risks for global markets and central banks will have to tread carefully around them.

This week we also have local jobs numbers, which have been very choppy of late. On the other side of the equation, the US dollar will be taking its lead from FOMC meeting minutes that could possibly sound a hawkish tone.

Today’s move saw AUD/USD slip below an uptrend that has been in place since October 2008. I feel traders will be taking advantage of strength in the near term for selling opportunities. There is another uptrend support line that has been in place since 2001 and comes in at around $0.7150.

Click to enlarge

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts