The Aussie has had a rough month. The Aussie is being beat up for several different reasons, most of which have very little to do with Australia itself, although retail numbers were soft recently.
Unfortunately, the Aussies are highly dependent on exports in a world that is slowing down. The demand for raw materials such as copper, iron, and gold is waning, and the exports out of Australia are suffering. The US dollar is being used as a safe haven trade at the moment, and as a result nothing is gaining on the Dollar in general. While the Aussie has been somewhat resilient, it is falling against the Greenback like so many other currencies at the moment.
The slowdown in China is particularly harmful for the Aussies. The Australians are by far one of the largest suppliers of raw goods to the factories on the eastern seaboard of China, and as a result there is a lot of money that isn’t flowing into Oz now. The Australians are currently expected to do another rate cut in either June or July, and this will weigh upon the currency as well. However, it can certainly be said if it wasn’t for the rest of the world – the Aussie would be doing just fine.
The candle on Thursday was a shooting star at the lows of a down move. This is normally an ominous sign as it shows a complete lack of ability for the bulls to rally this pair. The failure to do so shows just how weak the “risk on” trade is at the moment. The 0.97 level is a significant support level, and the fact that this candle appears on top of it shows that there is a massive amount of pressure on the support at the moment.
It is because of this pressure that I suspect we are going to see lower prices. The Non-Farm Payroll numbers today could be the catalyst. This will be especially true if the numbers are weak, and the “risk off” trade will be in full effect, and the Aussie should plummet below the 0.97 level as a result. Rallies will more than likely cause me to sell from higher levels as well, as the risks to the global markets are certainly numerous at the moment.