The Australian dollar is holding on and keeping some distance from the 0.80 line on AUD/USD, but can this last?
The better than expected building approvals in Australia kept the pair away from the line, but the lower high and the ongoing greenback strength does not bode well from the pair.
AUD/USD already lost the 2010 low for a second time, and then it got some good news: Australian building approvals leaped by 7.5% in November, contrary to a predicted drop of 2.7%. This comes on the top of a gain of 11.5% in October. An active housing market could prevent the RBA from cutting the interest rates.
However, the recovery was only enough to eventually send the pair to 0.8124. This is lower than the previous swing high of 0.8155. Further resistance is at 0.8215.
The downtrend seems quite clear.
If we look down, the pair hit the 0.8032 level twice in the past week. This is the double bottom on AUD/USD. Bulls could see it as a bottoming out, while bears might look to this level and target a potential breach as the beginning of a faster move down under.
Looking at fundamentals: the Chinese slowdown, a possibility of rate cuts in Australia and the upcoming rise of rates in the United States, the trend remains to the downside. Stevens’ 0.75 target does seem to be fiction.
More important data awaits the Aussie: local retail sales, which are released on Friday at 00.:30 GMT and are expected to show a gain of 0.3%, as well as Chinese CPI, which is expected to stand at 1.5% y/y.
In the US, we have the Non-Farm Payrolls. See how to trade it with EUR/USD.
Here is how it looks on the chart:
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