The Australian dollar has been under a fair amount of pressure as of late, as a mixed bag out of China and recent weakness has got the Reserve Bank of Australia worked up. The weakness in China saw industrial production y/y dip to 6.5% (7.1% exp) and fixed asset investment y/y was also slip to 8.9% (9.1% exp) - worrying signs for one of the world's largest economies. This obviously has a flow on effect for the Australian economy as China is one of its largest trading partners. Additionally, the recent monetary policy meetings saw the RBA focus on the labour market and in particular growth in the jobs market and wage growth; all of which has been far too slow for the RBA and continues to be a headache. The market thus far has been accordingly putting pressure on the Australian dollar, and this will be somewhat welcomed by the RBA as a way to alleviate pressure and help stoke inflation. One of the main things to watch will be to see if this inflation flows over into wage growth to help the economy grow.
AUDUSD bears have been in control over the last month as the market enjoys a resurgence in USD bulls and plays of the weakness of the Australian economy. So far daily movements have been consolidated bullish movements followed by aggressive bearish plays to push the currency pair lower. The 20 day moving average has been tracking the movement lower and thus far has been acting as strong guidance for the direction and acting as a dynamic level on the way down. Resistance levels are currently being pressure around 0.7439 with the possibility of further out breaks touching on 0.7498 and 0.7568. However if the market does decide to follow the current trend this pressure on support levels at 0.7343 and 0.7178 are likely to be the main targets for traders on the way down. All in all though it seems that the AUDUSD is likely to find plenty of volatility in the coming months with a mixed bag from China and the US recently.
Oil has once again come under the pump, as private inventory figures have shown a build up in oil reserves. This should not be a surprise given how back and forth it is, but the market has been quick to turn its toes on the recent bullish run and drive oil prices lower. It does feel however that clean energy is starting to make its mark amongst shale oil and causing issues for oil bulls who have been betting big for some time.
So far Oil has struggled to break through resistance at 49.32 with each push through being pulled back by the market. Support levels are likely to be the next targets if we continue to see surpluses and I would expect 47.75, 45.78 and 44.02 to be the most likely candidates for large price action movements lower.
