AUDUSD pair is currently on strong downward pressures, both from fundamental and technical perspectives. On the fundamental front, Australia's continued trade deficit and a significant drop of Chinese HSBC Services PMI has weaken the AUD. The ensuing RBA decision to remain neutral and left rate in its current 2.5% does not excite the market.

AUDUSD pair is currently on strong downward pressures, both from fundamental and technical perspectives. On the fundamental front, Australia's continued trade deficit and a significant drop of Chinese HSBC Services PMI has weaken the AUD ahead of Australia's central bank interest rate decision. As well, the ensuing RBA decision to remain neutral and left rate in its current 2.5% does not excite the market. The Aussie technical analysis too, has not shown signs that prices will go up in the next few days.


AustraliaAustralia balance of trade has recorded the third consecutive deficit in July 2014

High Deficit, Low PMI, And Bland Statements

Australia recorded trade deficit as much as $AUD 1.68 billion in June after noted $AUD 2.04 billion deficit in May. The data is better than expected by analysts, but it proves that its external sector is currently under heavy pressures due to high commodity prices that has led to lower exports. Add to that, China as Australia's number one trade partner has revealed bits of stagnation. Chinese HSBC Services PMI for July 2014 has fallen from 53.1 to 50. It is quite significant, as 50 is the treshold that differ between an economy that experience contraction with one that undergo expansion.

In addition to the unsatisfactory data, RBA Governor Glenn Stevens statements today is also relatively bland. The central bank expects smaller increases in resource exports, moderate consumer demand, and strong expansion in housing construction. Beside of that, the report said , There has been some improvement in indicators for the labour market this year, but it will probably be some time yet before unemployment declines consistently. Low wages growth is estimated to support the attainment of inflation target. Therefore, inflation is expected to stay on the 2-3 percent target through the next two years. The report is concluded by, On present indications, the most prudent course is likely to be a period of stability in interest rates.
 
At this point, RBA decision is no longer a surprise, and market respons is accordingly cold.

Sell AUDUSD?

Meanwhile, AUDUSD technical perspective is mixed. In the shorter timeframe, the commodity currency seemed like it is going to go up, but on H4 timeframe, it is actually still under pressure.


AUDUSDAUDUSD pair in H4 timeframe has shown a significant EMA crossover last week

Note that the red EMA-20 line has cut down the blue EMA-60 line and the magenta EMA-100 line last week, and there doesn't seem to be any signs that significant reversal will occur in the next few days. If the current volatility remains, then there is high possibility that AUDUSD will stay above support level 0.9273, but lower than 0.9393. Or in another word, AUDUSD will likely move within Fibonacci levels of 0.0-61.8, with special consideration to open sell position if price failed to break through 50.0 or touches 23.6 level.  

However, be aware that surprises might come from the release of US ISM Non-Manufacturing PMI later today, as well as Australia unemployment data and US Weekly Jobless Claims on Thursday. Stronger downward pressure could move AUDUSD below the current support level (0.9273), while any news that might attract investors to buy the Aussie could help it break the virtual resistance of 0.9393.