The AUD/USD pair fell hard during the session on Friday, breaking the bottom of the hammer from the Thursday session, and testing the 0.89 level. That being the case the market should continue to break down if we can get below that area. Once we do, I think that this market should then head to the 0.8650 level. That is an area that is much more significant and it support, so I do think that we will eventually head towards there.
Even if we bounce from here, the market will more than likely struggle to get above the 0.91 level, as it looks to be fairly resistive. With that being the case, the Australian dollar will continue to be one currency that I am more comfortable selling and buying, and quite frankly it’s not until we get above the 0.92 level that I would even consider buying the Australian dollar, which would have it heading back into the previous consolidation area with the 0.9450 area or so being resistance.
HSBC Manufacturing PMI
The HSBC Manufacturing PMI number should end up driving the Australian dollar next. The number comes out on Monday, and as a result I think that we could have a bit of a reaction due to the fact that Australia supply so much of China’s raw materials. If the economy in China slowing down, that is very negative for the Australian dollar.
On the other hand, if we do have fairly strong numbers out of China, we could get a bit of a bounce but I suspect that more than likely that bounce will simply be a nice selling opportunity. The US dollar continues to be the favored currency of traders around the world, and I don’t see that changing anytime soon. Granted, we may get a little bit of a reprieve for the Australian dollar and other currencies around the world, but at the end of the day I think that the trend is set, especially when you look at the US Dollar Index. Ultimately, I will be looking to sell this market, it’s just a matter of whether or not it’s going to be higher than current levels, or below the 0.89 level.
