Working short positions into AUD/USD

Traders should be watching $0.7960 as key resistance for the AUD/USD today. This represents the top of the multi-month channel, the 50-day moving average and just below the 50% fibo of the year’s high to low.

AUD
Source: Bloomberg

Interestingly, the short-term price action (on the daily chart) is actually looking more constructive, having printed a higher high and closing above the 38.2% retracement of the year’s high-to-low point at $0.7881. Momentum and trend indicators are echoing this, as you can see in the stochastic and MACD oscillators.

Today’s Aussie capex data (11:30 AEDT) could be key as this feeds into the upcoming growth print. I think we will get a small increase in revised capex intensions for 2014/15, although this still leaves intentions down 7% or so over the corresponding period. We also get the first estimate for 2015/16 CAPEX plans. Economists expect a 4.3% decline from the 2014/15 figure.

With the market pricing in a 30% chance of a March rate cut from the Reserve Bank of Australia, there is some room for the pair to squeeze higher if you feel they won’t raise again in March. In this regard, any moves to $0.7960 look like a good point at which to work short positions into.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.