AUD/USD fell during the Thursday session as the poor Chinese economic numbers that have been coming out recently wait upon the commodity currencies. There is serious concern that the slowdown in China is accelerating, and this will put a serious dent into the commodity markets which Australia is so reliant upon for its export market.
Initially the Thursday session look bullish, but as has been the case recently, the 1.05 level proved to be a bit too much. This area is starting to become serious resistance, and as such I am very squeamish about getting along of this pair until we get a daily close above it. Interestingly enough though, there is an uptrend line that the pair bounced off of at the very end of the session. I believe that this trend line is rather vital. If we can bounce off of that, there is a reasonable chance that we can eventually overtake the 1.05 level. However, if we break down below it, and I have the 1.04 level as my trigger price - I think this pair will go straight to the 1.03 level.
When you trade the Australian dollar, you are trading the Chinese economy by proxy. With the Chinese economy looking so shaky at the moment, it does make you wonder whether or not the Australian dollar has seen its highest point for the year. Adding to the pressure on the downside is the fact that RBA Gov. Stevens was jawboning the value of the Aussie down during the session.
Moment of inflection
It is at times like these that major decisions are made in currency pairs. The fact that the uptrend line coincides with the 1.04 level suggests that perhaps we are making a bit of a trend decision at this point in time. With the fact that we are approaching the very end of summer added to the mix, this could be very interesting signal indeed.
When it comes to the Australian dollar, I believe that it all is about China. Let's be honest here, the Chinese aren't exactly the most forthcoming government on the planet. If they are willing to put out disappointing numbers, you have to wonder how bad the economic situation really is getting on the mainland. Once the rest the world figures this out, the Australian dollar will collapse. Of course, hope burns eternal and it may not be as bad as it seems, but something certainly doesn't look right in this currency.