AUD: Australian Dollar needs strong support to start large-scale correction

At the Forex currency market on Wednesday the Australian Dollar rate tries to continue upward ascend which started yesterday; however catalysts are not there this morning: markets’ attention is focused on final session of the U.S. Federal Reserve tonight. Investors’ thirst for risk remain low despite attractive exchange rates of the currency.

Forex forecast: MACD indicator for the pair AUD/USD goes down in the negative area after breaking through the signal line from top to bottom and is giving a sell signal. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: in case of breakdown at the level of 1.0250, the pair will go to 1.0220 and 1.0200. If downward breakdown does not take place, the pair has a chance to go to 1.0355.

It became known this morning that leading indicators index Westpac/MI in Australia increased by 1.4% in July, to the level of 284.2 points (+3.1% y/y) versus prior expectations of +2.7%. The AUD neglected this information: there are more influential players on the scene of the currency market on Wednesday.It became known earlier that consumer inflation expectations in Australia rose to 2.8% in September, as per estimates of Melbourne Institute against provisional estimate of 2.7%.

This data is of general nature and the AUD did not respond to it; however it is obvious that inflationary pressure will continue to grow. The data released earlier showed that consumer confidence Westpac in Australia rose by 8.1% m/m in September, reaching the level of 96.9 points. Statistics released earlier showed that index of business conditions NAB in Australia fell by 3 points in August against the level of -1 point in July. The index declined to the lows since April 2009, indicating slump in the sentiments and prospects. National Australian Bank Ltd, noted commenting this outcome that it reflects increased level of uneasiness and concern that debt crisis will spread further.

According to the data released earlier trade balance in Australia was at the level of +A$1.83 billion in July against the forecast of +A$1.9 billion, which is slightly better than the data in June, however weaker than predicted. Obviously, external background puts pressure on the economy of the Green Continent. Minutes of the last meeting of the Reserve Bank of Australia which was made public this morning says that current levels of the rates correspond to the existing situation, while medium term outlooks for economic growth continue to be optimistic.

Companies are ready to hire employees and it is a positive factor, however expensive AUD has forced them to review their business strategies and plans. The minutes look weird, considering that Australian economy suffers huge losses now due to the decrease in exports levels and particularly for coal.