Concessions from Australia’s government on a proposed mining tax gave a boost to AUD/USD but the moves were short-lasting, something that points to further Australian dollar weakness.
Mining companies appear to be happy with the watered down legislation and that will contribute to steady investment in the coming years. AUD initially rallied on the reports but fears of a global slowdown appear to be outweighing the kneejerk reaction higher. The chart is also looking bearish.
AUD/USD has fallen from 0.90 to 0.84 over the course of ten sessions, so we are at somewhat oversold levels. We expected a rebound to 0.86 but even with the good news about the mining tax we got only a rally to 0.8510, not even the 38.2% retracemenet of the down move.
On the short-term chart, we see a downtrend with 0.8509 as resistance followed by 0.8565. With a series of lower highs, we now see 0.8313 as a clear target early next week. Fundamentally and technically AUD/USD is looking bearish — sell any strength.