China’s yuan fell to an 11-year low against the U.S. Dollar on Thursday, dragging the Australian Dollar with it. Traders are saying worries about an economic slowdown are the catalysts behind the selling pressure.
In onshore trading, the yuan fell to 7.0752 per dollar, its weakest since March 2008, before recovering slightly to 7.0732. In offshore trade the dollar rose 0.29% to 7.0872 yuan. Major Chinese state-owned banks were seen supporting the yuan by receiving dollar/yuan swaps, traders told Reuters.
At 07:03 GMT, the AUD/USD is trading .6769, down 0.0011 or -0.18%.
In other news, Australian Flash Manufacturing PMI came in at 51.3, lower than the previously reported 51.6. Flash Services PMI fell to 49.2 from 52.3, putting in contraction territory.
Daily Technical Analysis
The main trend is down according to the daily swing chart. The Forex pair isn’t even close to changing the main trend to up. First it has to change the minor trend to up then it has to cross to the strong side of a retracement zone. A trade through .6677 will signal a resumption of the downtrend.
The minor trend is also down. Although there have been a series of price swings over the last two weeks, the minor trend will change to up on a trade through .6821. A move through .6736 will reaffirm the downtrend.
The minor range is .6677 to .6821. Its 50% level or pivot at .6749 has been providing support since August 8.
The main range is .7082 to .6677. If the minor trend changes to up then its retracement zone at .6880 to .6927 will become the primary upside target.
Daily Technical Forecast
Based on the early price action and the current price at .6769, the direction of the AUD/USD on Thursday is likely to be determined by trader reaction to the uptrending Gann angle at .6787.
A sustained move under .6787 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to extent into the minor bottom at .6755 and the pivot at .6749.
If the pivot fails as support then look for the start of a steep break with the next targets another minor bottom at .6736, followed by an uptrending Gann angle at .6732.
If the angle at .6732 fails as support then look for a plunge into the angle at .6705. This is the last support angle before the .6677 main bottom.
Overtaking .6787 will signal the return of buyers. Strong buying could run stops over .6799, .6818 and .6821. This could lead to a test of the downtrending Gann angle at .6842. This is the last potential resistance angle before the 50% level at .6880.
This article was originally posted on FX Empire
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