FX News - Mar 12 2014: AU Remains Vulnerable to CN

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The AUD/USD showed how vulnerable it remains to changes in China’s economy after a series of events in the Asian country yesterday and today. Risk aversion began to grow yesterday when rumours circulated about more corporate defaults in China. A report from Bloomberg said that bonds and stock of Baoding Tianwei Baobian Electric Co. were suspended from trading yesterday after posting losses for two straight years. Meanwhile today, a fall in the price of copper further aggravated the AUD/USD pair’s situation, as the value of the element fell by 8.61% since Friday.

In Australia, Westpac released its Consumer Confidence and Consumer Confidence Index for March, both of which came out weak. Consumer Confidence fell by 0.7%, while the Index went from the previous 100.2 to just 99.5. Home Loans for January, meanwhile, remained flat, and Investment Lending for Homes for the same period fell by 3.3%.

All these reports have had a hand in the AUD/USD pair’s return to the sub-0.9000 level. It began to plummet late in the European session from around the 0.9040 area, and then to 0.8970 around the time of the US session. The slide continued throughout the Asian session, and it is currently trading at 0.8962. Initial resistance for the pair is at 0.9015, followed by 0.9037. Meanwhile, initial support is at 0.8923, followed by 0.8901.

The EUR/USD took a heavy beating at the beginning of yesterday’s European session, dropping to as low as 1.3835. However, it managed to recover around the US session and peaked at around the 1.3875 area. The pair has so far made a slightly steady rise during today’s Asian session as it hovers within the 1.3855-1.3865 areas. It is currently trading at 1.3855, with initial resistance seen at 1.3870, followed by 1.3905. Meanwhile, initial support is at 1.3824, followed by 1.3789.

By FX Strategy Team, Published on 12th of March 2014
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