AUD/USD: Desperately Clinging To Key 0.09 Level

Throughout the last few weeks the Australian dollar has done very little other than continue to trade around the 0.90 level, although over the last week it has crept a little lower.  Over the course of the last week including at the start of this week, it has fallen down sharply below this level to a support level around 0.8900, although over the last 24 hours it has tried to rally a little higher but it hasn't moved far. Earlier last month the Australian dollar enjoyed a strong move higher moving through the previous resistance level at 0.88 and reaching a three week high around 0.8980. For a couple of weeks the Australian dollar continued to make runs at the resistance level of 0.88 only to be rejected again and again and forced lower. During this time the Australian dollar seemed content to remain steady and consolidate just below the key 0.88 level, after its strong fall through most of January. For the last few months the Australian dollar has established and traded within a narrow range roughly between 0.88 and the previous resistance level at 0.90.

Back in January the Australian dollar was able to rally higher pushing through the resistance at 0.90 to a one month high near 0.91, however it has since returned to more familiar territory below the resistance levels at 0.90 and 0.88. After showing some resilience in early December moving to a one week high above 0.9150, the AUD/USD spent the next two weeks turning around sharply and falling heavily down to a then three month low close to 0.88.

After all of its steady good work in the middle of November which saw the AUD/USD steadily move higher from support at 0.93 back up to a one week high near 0.9450, the AUD/USD has since returned all of those gains and then some more. Throughout most of October the AUD/USD enjoyed a solid and steady move higher from the support level at 0.93 up to the resistance level at 0.95 and beyond to a high around 0.9760. It has been all down hill since then. Throughout the first half of September the AUD/USD enjoyed a solid run which was punctuated by a strong surge higher sending it to a then three month high just above 0.95. A couple of months ago the AUD/USD had been trying valiantly to stay above the support level at 0.89 as all week it placed downward pressure but was unable to sustain any break lower.

Australia’s central bank reiterated that it’s likely to maintain a period of record-low interest rates and renewed a reference to the currency’s strength.  Governor Glenn Stevens and his board kept the overnight cash-rate target at 2.5 percent, saying in a statement that housing prices “have increased significantly” and the Aussie “remains high by historical standards.” The Reserve Bank of Australia’s pause was predicted by all 32 economists surveyed.  After 2.25 percentage points of rate cuts from late 2011 through August, the RBA is reluctant to add stimulus to the economy as Sydney house prices surge. Markets and economists predict Stevens will leave rates unchanged at a record-low this year to avoid a growth gap as mining companies plan fewer projects amid slowing Chinese growth, weakening the job market.

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