Investing.com - The Australian dollar traded modestly higher against its U.S. rival during Monday’s Asian session, but near-term upside could be limited for the Aussie.
In Asian trading Monday, AUD/USD rose 0.11% to 0.9748. The pair is likely to find support at 0.9672, the low from May 31, 2012 and resistance at 0.9829, Friday’s session high.
The Aussie has been under pressure in recent weeks after the Reserve Bank of Australia cut its benchmark rate to a record low of 2.75 percent. That is 500 basis points lower than RBA’s rates of five years ago.
Adding to the bear case for the Aussie was news that George Soros has shorted the currency and that former hedge fund manager Stanley Druckenmiller is bearish on the Aussie as well.
Making matters worse for the Australian currency was commentary released last week from Goldman Sachs. While some analysts see fair value for AUD/USD at 0.9400, Goldman’s call is far more grim. The bank said AUD/USD could fall to 0.8000, or an almost 24% decline from the mid-April top.
The bank added that its short Aussie idea is one of its top trades for this year.
"Australian activity is set to slow in 2013, as the peak in the mining investment boom passes, along with what we believe will be the inability of the non-mining sector to pick up the slack," said Goldman in a research note.
Australia’s AAA credit rating and high interest rates compared to other major developed world economies have sent scores of traders into the Aussie in recent years, but catalysts appear to be in place to take some of the wind out of those sails.
Elsewhere, AUD/JPY fell 0.23% to 100.26 while GBP/AUD inched down 0.10% to 1.5566. AUD/NZD dropped 0.16% to 1.2050.
In Asian trading Monday, AUD/USD rose 0.11% to 0.9748. The pair is likely to find support at 0.9672, the low from May 31, 2012 and resistance at 0.9829, Friday’s session high.
The Aussie has been under pressure in recent weeks after the Reserve Bank of Australia cut its benchmark rate to a record low of 2.75 percent. That is 500 basis points lower than RBA’s rates of five years ago.
Adding to the bear case for the Aussie was news that George Soros has shorted the currency and that former hedge fund manager Stanley Druckenmiller is bearish on the Aussie as well.
Making matters worse for the Australian currency was commentary released last week from Goldman Sachs. While some analysts see fair value for AUD/USD at 0.9400, Goldman’s call is far more grim. The bank said AUD/USD could fall to 0.8000, or an almost 24% decline from the mid-April top.
The bank added that its short Aussie idea is one of its top trades for this year.
"Australian activity is set to slow in 2013, as the peak in the mining investment boom passes, along with what we believe will be the inability of the non-mining sector to pick up the slack," said Goldman in a research note.
Australia’s AAA credit rating and high interest rates compared to other major developed world economies have sent scores of traders into the Aussie in recent years, but catalysts appear to be in place to take some of the wind out of those sails.
Elsewhere, AUD/JPY fell 0.23% to 100.26 while GBP/AUD inched down 0.10% to 1.5566. AUD/NZD dropped 0.16% to 1.2050.