The AUD/USD pair had a positive session on Wednesday, as it slammed back into the bottom of the 0.9650 level. However, you can see that the market couldn't stay above that level, and I believe this is simply a "dead cat bounce" of sorts. This market has fallen rather significantly, so the fact that value investors would come in and try to front run any type of significant rally doesn't surprise me at all. However, I have absolutely no interest in stepping up in front of this train.
I believe that this market will continue lower, but the possibility of a bounce does exist at the moment. If we get that bounce, and more than likely will be this market just simply trying to gather more sellers in order to punch a hole through this bottom support. I believe that a break of the lows for the Wednesday session would be enough to start selling this market again, and that we could free fall down to the 0.95 level, followed by the 0.90 level.
Watch China
The key to Australia really is China. With their cooked up numbers, a lot of traders are very suspicious of economic reports. The fact that some of the private numbers that come out of that country are starting to show signs of contraction really has a lot of people concerned. The HSBC PMI numbers came out below 50 recently, which of course shows industrial contraction. If that's the case, it makes sense of there would be less money flowing into Australia as the Aussies are very dependent on the Chinese for their raw materials based economy to get flowing. If China slows down, Australia does whether it wants to or not.
.jpg "AUD/USD Daily")
Going forward, you will have to keep an eye on the Chinese situation and more importantly things such as electrical usage and the above-mentioned HSBC PMI numbers for hints on where the Aussie dollar may end up. The Australians have been complaining about an overly inflated Aussie dollar, and it looks like they are now getting their wish as the value should continue to fall over time.