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

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.