Australians head to the polls on August 21 and there will be implications for the Australian dollar.

AUD/USD has fallen in the past two sessions but has made a slight recovery so far on Friday.

The most likely outcome of the election is a slim majority for the incumbent Labor Party in the Lower House. If, however, the Liberal/National Party coaltion pulls out a win, we would see the Australian dollar rally. The coalition says it will scale back the proposed mining tax, something that will encourage more foreign investment and development in Australia. Bookmakers are suggesting a 75% chance of a Labor majority.

The big story will likely be the Senate.   The most likely outcome is that the main parties will split the vote and that the Greens  will holding the balance of power in the Senate. The Greens favour a more punitive mining tax which is something that will hurt AUD. The outcome, however, will be up for prolonged debate.

In forex,a big move normally follows an election, especially when the outcome is uncertain. The 100-day moving average at 0.8840 is critical support. A decline lower points to a further 200-pip fall. The failed rally on Thursday forms a bearish candlestick as well.

Trading around an election can be treacherous. Make sure your stops are in place.

North American markets got a big boost from news that BHP Biliton had proposed a $37 billion takeover of Potash Corp. The takeover suggests corporations are willing to invest and spend, something that has been up for debate. Companies have been hoarding cash, unwilling to hire or invest due to the uncertain economic environment. If the move by BHP is the start of a trend, it will signal growing corporate confidence in the worldwide economy – something that will boost AUD and CAD.

There is a downside bias as USD/CAD consolidates in a wedge formation. A drop below minor support at 1.0305 would point to further losses for the U.S. dollar against its Canadian counterpart.

For the Australian dollar, the candlestick patterns are bullish in the short-term but a buy signal won’t be confirmed until 0.9081 is breached. With Asian markets risk averse at the moment, there may be good value in establishing longs if AUD/USD drifts toward 0.9000.

The Australian dollar is nearing critical support and in danger of falling to an eight-month low. There are signs of oversold conditions as we near support at 0.8578 and a bounce is possible. A sustained break below that level would be very bearish.

We also have to address the euro, given the events of the past 24 hours. We were constructive on the euro’s fortunes heading into yesterday’s session. We saw the potential for a bounce to 1.27 or even 1.31 on extremely oversold conditions. The market was tracking higher for most of yesterday’s session as the market touched 1.2445 but the legs were kicked out from under the euro after Germany banned certain types of short sales. German financial regulators banned naked short sales of exchanged traded euro area debt, credit default swaps and on the shares of 10 financial institutions. In the medium term, this is very bearish and the market closed below our sell line at 1.2330. We will look for levels to enter short positions.

The Australian dollar was beaten up badly on Tuesday and continues to face pressure so far today. Notice how close we are to the 8-month low.

We have fallen very quickly in the past two weeks. After the panic low on May 6, we have rebounded only to trace out a fresh low. That price action is bearish, no doubt.

We have to point out that the RSI is flashing a very oversold signal. In this case, we will ignore that signal if we see a sustained move below the 0.8578. The measured target of the drop would be 0.7754, there is also support at 0.7702.

The Australian dollar fell to an 8-month low today against the Canadian dollar, breaching technical support and breaking out of a 3-cent range. This commodity currency cross is one of the least volatile trades in the forex market because eliminates much of the ‘risk’ trade and allows market participants to focus on the relative strengths of Australia and Canada. Last week, Canada posted the largest one-month gain in jobs in history and that has increased speculation that the Bank of Canada will hike interest rates in June. On May 12, Australia will reveal its April jobs report. The market is expecting  22.5K new jobs. The strength of the report will be a big factor in whether the Reserve Bank of Australia raises interest rates. The market, however, is showing that it expects the Bank of Canada to hike rates more than the RBA in the coming 18 months.

As we can see, the pair carved out a rough range between 0.9178 and 0.9475 (297 pips) since the start of the year. Today, the range broke to the downside after higher-than-expected Chinese CPI cooled optimism for the Asia-Pacific region. Technically, the measured target of the range and breakout is 0.8881, which corresponds very well with the 38.2% Fibonacci retracement of the huge March 2009 to Nov. 2009 rally at 0.8867. Other support includes the July 2009 major low of 0.8796 and the Aug. 2009 low of 0.8983.

Short-term momentum indicators show the pair as oversold. The RSI has fallen to 28.70 and we are beyond the lower reaches of the Bollinger bands. That indicates that the market is potentially oversold in extremely short-term durations. It should be noted, however, that momentum indicators usually flash overbought/oversold signals after a range break.

Beward of tonight’s Austrlian employment report.

The Australian dollar has rallied nearly non-stop for the past seven sessions but the move is about to hit some roadblocks, namely the 38.2% Fibonnaci retracement of the five-week move lower and psychological resistance at 90.00.

AUD/USD has cleared several hurdles on its rebound, including the lows of the old range at 0.8919 and 0.8946. This is a positive indication for the pair and shows that 0.94 may still be in play.

The key resistance levels are the Fibonacci ones — 0.38.2%, 50% and 61.8%. They fall at 0.8992, 0.9071 and 0.9150. If 91.50 is cleared we believe a re-test of 0.94 is likely. Another level that could offer some resistance is the 50-day moving average at 0.9104 currently but in the past the 50dma has been neglected.

We would like to see a close above 0.90 to confirm a contiued bullish trend but after such a run-up we believe a pullback is the most likely scenario. Expect 0.8916 to act as support, if not a slide back to 0.8750 and below is likely.

Have a Happy New Year.

It looks like our Australian dollar call was a good one, especially if you could bear the head-fake in the first hour of the trading week. We still see plenty upside in this trade but the economic data in the day ahead will play a big role.

 The reaction was predictable. There was some speculation of a 50 basis point rate hike (the OIS market suggested an 18% chance), so that had to be wiped away.

Now the AUD will start to look ahead. The market has priced in 210 basis points of tightening in the next 12 months and it’s those expectations that have fuelled the Aussie dollar rally.

Technically, we see AUD in the centre of a wedge patter if we zoom out on the one-hour chart.

AUD/USD

The AUD is refusing to stop its uptrend!! in order to understand the change this pair has made an increase of more than 41% in the last 7 month. We can now see very clearly how this pair continues to move in an uptrend. Moreover we continue to receive good results from Australia that continue to support this uptrend while the US results continue to be mixed.

In a country where agriculture and mining products constitute 60% of exports, it is crucial for us to understand the dramatic impact that commodities have on the currency market and specifically on the Aussie dollar (see this week’s blogs entry talking about the gold). Besides, Australia’s geographic position allows it to maintain trade relations with emerging markets in South-East Asia where trade is done in Aussie dollar not USD, thus continuing to support its uptrend.

In other word, we have more people buying the AUD and selling the USD.

Keep looking at the charts and look for the fundamental announcement coming from Australia and the US that can directly affect this pair

In the case of this pair we will not put any indictors on the chart but rather we will put 2 lines on that chart and view how simple and easy this uptrend is to analyze and see. We will continue to observe this pair closely heading into the fourth and final quarter of the year.

Fundamentals:  We have a few announcements today that will affect the market.

Coming from United Kingdom we have the “PPI Input M/M”. The previous announcement was 2.2% and the forecast for today is -0.9%. (08:30 GMT). A few more announcements are also coming. One is from Canada and it’s the “Employment Change” which will be released at 11:00 GMT. The previous announcement was 27.1K and the forecast for today is 4.9K. We also have the “Unemployment Rate” coming from Canada, the previous announcement was 8.7% and the forecast for today is 8.8% (11:00 GMT). From the US we will have the “Trade Balance” previous announcement was -32.0B and the forecast for today is -32.8B (12:30 GMT). Also don’t miss the “BOC Business Outlook Survey” AT (13:00 GMT).

AUD/USD

It‘s not the first time that we are talking about this great pair.  The thing about this pair that makes it so exciting is that every few weeks, days or hours this pair is breaking the previous record and moving in a uptrend. Take a look over the daily chart and you will clearly see the trend this currency is moving in. Over the last year we have seen that this pair has moved in the 2600 pips range and in a clear uptrend. Now the big question I hear everyone asking is when and will this pair will really break the record and prove this uptrend to be real and reach the highest point of 0.9400?

In order to get the feeling of the movement you will need to take a look at a few different parameters, one is the fundamental news that will come from the US and Australia that will directly affect the move and trend of this currency.  Next thing to do is keep looking over the chart and to technically analyze the trend of this pair over non fundamental days where only sentiment will effects its movement.  The combination of both will help you make the right decision when trading. Over the last few weeks the market has moved nicely for this pair, let’s go ahead and translate today’s movements to money in our pockets!

Fundamentals:  We have a few announcements today which will affect the market.

Coming from United Kingdom we have the “Services Purchasing Managers’ Index”. The previous announcement was 54.1 and the forecast for today is 54.6. (08:30 GMT).

Two more announcements are also coming in. One from the US “ISM Non-Manufacturing PMI” which will be released at 14:00 GMT, the previous announcement was 48.4 and the forecast for today is 50.  Also coming from New Zealand we have the “Business Confidence”. The previous announcement was -25. (21:00 GMT), no forecast on this one available.

Fundamentals:

We have a few announcements today which will affect the market.
Coming from Europe we have the “Minimum Bid Rate”. The previous announcement was 1.00% and the forecast for today is 1.00%. (11:45 GMT).at 12:30 GMT we have the European Central Bank Press Conference.

Two more announcement coming in from U.S. “Unemployment Claims” which will be released at 12:30 GMT, previously resulted at 570K and the forecast for today is 563K, The final announcement is the “Institute for Supply Management Non-Manufacturing Purchasing Managers’ Index”. The previous results were 46.4 forecast for today is 48.3 (14:00 GMT)

AUD/USD

Good morning, this is one of the most interesting pairs, as can be seen over  a daily chart , this pair moving  step by step leading us to an uptrend,  just recently this pair decided to stay in a clear range, it’s a question of time when the pair will decide to break into the s & r, we will wait and see, to where this pair will continue to move.  let’s see what happened yesterday  :133 pips movement.

USD/CHF

Over the last few days The pair is having a little difficulties getting above the Resistances  1.0600 and staying there. Looks like this pair moving to few new support lines as 1.0570. in case it will move more then 1.0570 we will set new S&R lines, the market have several bars before that happens, USD CHF moves without trend and swings around exponential  range moving averages of 50-100 pips
1 hour.

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