Goldman Updates On AUDUSD (And Sells The Pair)
From Goldman's Daniel Ryan:
With both Labor and the Coalition now tied on 73 seats (short of the 76 required for a majority), both parties will now begin negations to form a minority government. In light of the weekends developments, AUDUSD opened around the .8850 mark in Wellington, some 1pcnt from the NY close. Since however, there has been a very orderly recovery of those losses to open around the .8910 mark in London.
As outlined recently, my sense is that whilst the current political uncertainty is likely to offer a headwind to the AUD, it is the prospects for global and domestic growth which will reaffirm themselves as the primary drivers in the weeks ahead. I retain my bias for buying AUDUSD dips and hold core longs, and from here I would advocate buying weakness towards the 100dma (.8839). I note with interest the fact that AUDUSD has tested the critical .8840 - .8860 band of support three times in the last week without success, which encourages me to believe the path of least resistance is now higher.
Since the Wellington open we have been better sellers of AUDUSD on behalf of the franchise, though volumes have been modest. My sense is that for now, a 'sell-on-rally' approach will persist from the Spec community, however should a close above the .8975 mark develop, an unpleasant round of short-covering may then ensue. In terms of domestic data-flow, this week offers only some more peripheral numbers, with the next major point of interest being the Retail Sales report on 31.08 - this will be an especially important data-point given the RBA's recent focus on 'trends in household behaviour'.
Levels of note - Support - .8839 (100dma), .8796 (55dma), .8737 (22.7 low) - Resistance - .8973 (10dma), .9019 (19.8 high), .9060 (18.8 high)
AUDUSD - three tests of the pivotal .8840 - .8860 band of support, have all been unsuccessful in the last week of trading