Aussie Dollar breaks parity as commodities fall

The CRB Commodities Index gapped down to its lower trend channel in response to turmoil in Europe and the resulting stronger dollar.

CRB Commodities Index

The Aussie followed its Canadian counterpart below parity, confirming a primary down-trend with an initial target of $0.94*.


* Target calculation: 1.02 – ( 1.10 – 1.02 ) = 0.94

Loonie turns, will Aussie follow?

Canada’s Loonie broke parity against the greenback, confirming a primary down-trend and offering an initial target of $0.94*.


* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94

The Canadian and Aussie Dollars have tracked each other closely over the last year and it seems inevitable that the Aussie will follow the Loonie below parity.


Aussie weaker

The Aussie Dollar continues to consolidate between $1.03 and $1.06 against the greenback. Failure of support at $1.03 would test parity, while breakout above $1.06 would target resistance at $1.10. In the long term, declining commodity prices are likely to drag the Aussie lower — unless the Fed starts printing money again.

Australian Dollar AUDUSD

* Target calculation: 1.03 – ( 1.06 – 1.03 ) = 1.00

The Aussie Dollar is testing the upper border of the declining trend channel against its Kiwi counterpart. Reversal below short-term support at $1.255 would indicate respect of the upper channel and a down-swing to around $1.20*. Breakout above $1.28 is unlikely but would warn that the down-trend is weakening.

New Zealand Dollar NZDUSD

* Target calculation: 1.24 – ( 1.28 – 1.24 ) = 1.20

Loonie band

The Candian Loonie is consolidating in a narrow band above parity, warning of selling pressure. Earlier penetration of the long-term rising trendline indicates the up-trend has weakened. Breach of support would confirm a primary down-trend, with an initial target of $0.94 against the greenback.

Canada Loonie CADUSD

* Target calculation: 1.00 – ( 1.06 – 1.00 ) = 0.94