High Yielding Currencies Poised For A Rebound, Wednesday, August 29, 2007 4:14:21 AM
The high yielding currencies such as the Australian and the New Zealand dollars are set for a reversal of their recent losses against the dollar and the yen.Decreased investor confidence led to unwinding of carry trade positions, which in turn resulted in the weakening of the Aussie and the kiwi.
Reversing the upward trend that was in place for about five days from 21st August, the currencies were moving steadily downward for the past few days.
The Aussie-dollar, Aussie-yen, kiwi-dollar and kiwi-yen pairs have thus reached 1-week lows in early Asian deals on Wednesday.
Tuesday`s Conference Board data showed a decline in U.S. consumer confidence for August.
Also, the FOMC minutes of its August 7 meeting offered no clue to a time frame for a reduction in the benchmark interest rate. Therefore, investors sold riskier currencies.
The Australian and New Zealand currencies have now formed medium term lows versus their US and Japanese counterparts. With the Relative Strength Index in the oversold zone, both Aussie and kiwi are poised for a rebound.
Against the dollar and the yen, the NZ currency is likely heading toward 61.8% retracement levels from 21st August lows, while the Australian dollar is aiming its near term resistance levels around 38.2% retracement.
The recent fall pushed the aussie-dollar to a low of 0.8050 in early Asian deals on Wednesday, but it has moved up to 0.8146 lately. On the upside, 0.8205, which is a 38.2% retracement from its August 21st low, is seen as a near term level of resistance for the Australian currency. The RSI on the hourly chart is at 47.35.
Against the yen, the Aussie fell to 91.71 in Wednesday`s Asian deals, marking an 11-day low for the pair. However, the pair started ticking up lately and is now worth 93.3. If the pair strengthens further, 94.64 can likely be the next level of resistance, which is 38.2% a retracement from August 21st low. The RSI on the hourly chart is at 47.16.
The New Zealand dollar fetched as low as 0.6868 of a US dollar in early Wednesday Asian deals, but it gained ground thereafter. The pair is now trading near 0.6969. If the kiwi strengthens further, a near term resistance around 0.7043 may be tested, which is a 61.8% retracement from its August 21st low. The RSI on the hourly chart is at 44.6.
The kiwi also gained ground recently against the Japanese currency after hitting an 8-day low of 78.24 in early Asian deals, today. Of late, the pair is worth 79.88 and is likely targeting 81.24 in the near term, which is 61.8% retracement from its August 21st low. RSI on hourly chart is at 45.75.
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posted by Kalin Tasev @ 2:34 AM
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