AUD/NZD, still on 5-year depths; volatile outlook ahead

FXstreet.com (Chicago) - AUD/NZD hit weekly bottoms at 1.1305 earlier on Thursday as downward spiral continues. Bears outrun bulls so far ahead of an expected volatile Friday session in Asia. Prior to Assistant Governor Debelle’s speech, the Aussie extends gains to 0.03% so far.

Technical Levels

Technically speaking, the pair trades at 1.1314 between supports at 1.1314 (July 31st highs), 1.1293 (July 29th lows) ahead of 1.1264 (August 6th lows) and resistances at 1.1337 (July 28th lows), 1.1358 (August 5th lows) followed by 1.1385 (August 2nd highs). The FXstreet.com trend index reports the pair as slightly bearish on one-hour timeframe analysis.

Bearish bias

Kathy Lien, from BK Asset Management asses “the volatility in the U.S. dollar also caused wild swings in the commodity currencies which recovered mid day losses to end the day higher against the U.S. dollar.” With NZ’s economy expanding as proven by recently published manufacturing data contrasted with Australian manufacturing activity in decline, the 10% yearly loss can be justified. Lien adds that “even though there have been more recent improvements in Australian data, the outperformance of New Zealand leads us to believe that AUD/NZD is poised to retest its 4 year low of 1.12.”