Finotec News Archive - September 07 2007
AUD could continue to rise against USD?
AUD/USDAnthony Boyajian 
07 September 2007
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The Australian dollar headed for a weekly rise on signs the economy can weather a collapse in U.S. subprime mortgages that's blighted financial markets, supporting the Asian-Pacific nation's interest-rate advantage.
The local dollar gained against all 16 of its most-traded currencies this week as government reports showed the economy expanded at the fastest pace in three years and employers added workers for the 10th straight month in August. The economy has been boosted by Asian demand for Australia's raw materials, which add about 14 percent to its growth through exports.
Traders have priced in at least a 20 basis point increase in borrowing costs by the Reserve Bank of Australia in the next year, according to a Credit Suisse Group index, based on interest-rate swaps. The central bank kept its overnight cash rate target at an 11-year high of 6.50 percent this week.
The following technical analysis gives us a detailed lookout on what is expected to happen to AUD/USD.
The buying point is at 0.8185; based on a bounce of strong support level
- Previous resistance is the take profit at 0.8297
- Previous support will be the stop loss at 0.8119
The selling point is at 0.8274; based on a strong correction and break of the Standard Error Channel middle line.
- Fibonacci retracement 38.2% is the take profit at 0.8203
- Previous resistance is the stop at 0.8330
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages above the zero line, the shorter term moving average is faster than the long term and is pointing downwards with break of zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bearish direction approaching 30% line which is oversold area.
The momentum oscillator is very important to understand the strength of the market and as we see on the graph; it break the zero line and moving downwards. The Stochastic oscillator breaks 20% line and continues to go lower.
* The following analysis is for information only; Finotec is not responsible for any decisions or misinterpretations based on the given text.
By Finotec’s professional analyst,
Tony B.
dealingdesk@finotec.com
Finotec Analysis Team
07 September 2007
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