AUD/USD is nearing its longest seven-week decline, since 1997, on rising concerns of RBA intervention

November 29, 2013 8:59 am

Aussie headed for its longest drop, after falling for a sixth consecutive week against its US counterpart. This is the longest losing sequence, since the seven-week decline, ended in February 1997. The Australian dollar depreciated against the US dollar on rising concerns about declining foreign investments in the near future and rising concerns that RBA may intervene in the markets.

AUD/USD hit a session low at 0.9056 at 01:00 GMT, down 0.52% on a daily basis. The pair traded at 0.9108 at 8:15 GMT. Support was likely to be received at September 4th low, 0.9038, while resistance was to be encountered at November 28th high, 0.9150.

Australian Treasurer Joe Hockey, cited by Bloomberg, rejected a A$2.2 billion ($2 billion) takeover offer by U.S.-based Archer-Daniels-Midland Co. (ADM), by pointing out that foreign control of the east coast’s biggest crop handler isn’t in the national interest.

Robert Rennie, global head of foreign-exchange and commodity strategy at Westpac Banking Corp. in Sydney, cited by Bloomberg, said: “The ADM decision added some pressure to a weakened Aussie after Stevens recently referred to intervention, it’s a concern when you consider the importance of foreign direct investment flows.”

On Friday, RBA reported that the total amount of credit towards Australian private sector increased by the same rate in October as in September, by 0.3%. Preliminary estimates pointed a 0.4% increase. In annual terms, the indicator strengthened 3.5% in October, in line with preliminary estimates, which was the fastest rate of increase since January, and 0.2% more than previous month. The result was still well below the pace, regisered in October 2008.

Although the private sector credit for October met the forecast of a 0.3% gain, it disappointed as other business and personal credit remained weak, which seemed that an intervention by the Reserve Bank of Australia may be just around the corner.

According to Callum Henderson, a Singapore-based global head of currency research at Standard Chartered Plc., cited by Bloomberg said: “The bar for intervention is very high. It’s a useful potential threat to mention, but it becomes less useful if they actually do it. For the time being, they’ll focus on words.”

Meanwhile, the US dollar gained appeal on Wednesday, after a report by Thomson Reuters and the University of Michigan revealed that the final reading of the gauge of consumer sentiment in the United States climbed to 75.1 in November from a final value of 73.2 in October. Expectations pointed an increase to 73.1 in November compared to the preliminary reading of 72.0, published on November 8th, which was also the lowest point since December 2011.

Additionally, also on Wednesday, the Department of Labor reported that the number of initial jobless claims in the US, an indicator for lay-offs in companies, dropped by 10 000 to reach 316 000 during the week ending on November 23rd 2013, confounding preliminary estimates pointing that claims will climb to 330 000. The number of claims in the preceding week has been revised up to 326 000 from 323 000 previously.

Elsewhere, USD/CAD was trading at 1.0581 at 08:15 GMT, having touched highs unseen since July 5th, while EUR/USD touched a one-month high, trading at 1.3622 at 06:15 GMT.

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