The Australian dollar traded higher against the U.S dollar but gave back gains towards the close of the weeks trading session. The rally was supported by fundamental information from the Australian Interest Rate on Tuesday and FOMC Meeting Minutes on Wednesday.
The dollar weakened after the minutes of the Federal Reserve’s September meeting released Wednesday showed that some officials were concerned over a slowdown in global growth and the impact of the stronger dollar on the U.S. inflation outlook.
“Some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the U.S. external sector,” the minutes said.
The minutes prompted investors to trim back expectations for an earlier-than-expected hike in U.S. interest rates.
However, on Thursday the Australian dollar lost its strength after official data released showed that the number of employed people in Australia fell by 29,700 last month, confounding expectations for a 17,600 increase.
Weekly bias remains bearish after price rejected the 21 EMA on the daily charts forming a reversal chat pattern to the downside which happens to be the over-all trend in the pair. On the 4 hours charts, we have a fresh down cross of the 21 and 55 EMA, SSRC and RSI is also signalling fresh selling momentum. A clear break of 0.86416 support( October 3 low) would confirm the resumption of the sell trend and further decline to 0.80660 supports is expected in the long term picture. However in the medium term picture am expecting more supplying to the 0.85000 psychological zones.
On the other hand, if we get a price rejection on 0.86416 support to form a double bottom chat pattern, then we will looking to buy this pair back up to 0.88971 resistance and a break of this resistance would give an indication a reversal of the downtrend is unfolding.
There are no much fundamental events this week but investors would be taking a close look at the USD Retail Sales. On Monday, there are bank holidays in the U.S, Canada and Japan, so liquidity might be very low.