AUD/USD slumps to eight-month low

The greenback continued its ascent and even managed to brush off some mixed economic releases.

Source: Bloomberg

On the economic front, we saw a drop in durable goods orders after having been distorted by a sharp rise in aircraft orders the previous month. Unemployment claims also rose from the previous month but were still relatively in line with expectations.

A couple of key Fed members also spoke. Lockhart remained dovish while Fisher maintained his hawkish bias. Lockhart suggested that remaining patient until the middle of next year or perhaps a little later would not bring on a systemic financial event. However, Fisher said the Fed may start raising rates in the spring (second quarter).

Eyeing a move to January lows

AUD/USD was one of the worst hit as it struggled from the risk-off tone and US dollar strength. The pair dipped below the $0.8800 handle and printed a low of $0.8770, its lowest since February. This leaves the pair exposed to a potential move down to January lows at $0.8660.

Fundamentals are heavily skewed against the AUD, with commodity prices falling and its yield appeal running out of steam. The technical picture is also quite bearish as momentum is firmly to the downside. I continue to prefer selling the AUD into strength. It seems moves back above $0.8800 will be used as an opportunity to sell.

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