Thread: Near record lows GBP-AUD 28/07/09

Sterling has deteriorated against the AUD during trading this week, breaking long-term key support at 2.0000 and is currently trading close to a 12-year low.
The downtrend/strength of the Australian dollar has been assisted by recent comments from the Governor of the Reserve Bank, Glen Stevens - who confirmed that the Australian economy may rebound faster than previously forecasted.
Stevens opted to keep interest rates on hold at 3% for a third consecutive month during the latest RBA interest rate meeting held on 7th July. Between September 2008 and April 2009 he had reduced interest rates by a record 4.25 percentage-points.
In the past 24-hrs, he has suggested that Australian banks should attempt to reduce their reliance on government guarantees which were introduced at the height of the global financial crisis last year.

"While the use of government guarantees on bank deposits, as well as monetary and fiscal policy, helped support domestic demand and confidence during the period of maximum global economic contraction - it would be a mistake to lapse into the comfortable assumption that easy prosperity will come our way,”

Recent economic data confirmed that the Australian economy had already shown signs of a rebound with growth unexpectedly coming in at +0.4% for the first quarter after shrinking by 0.6% during the forth quarter. Business and Consumer confidence have also shown signs of improvement.

AUD BUYERS:
The technical outlook is negative, the break below key support at 2.0000 was a significant movement, and could potentially open the way for further downside movements as the rate approaches a 12-year low.
We are advising clients interested in purchasing the AUD from Sterling within the short-medium term to remain extremely cautious. Sterling is extremely vulnerable as a currency and any further negative data for the U.K, political instability, or any further unexpected positive data for Australia, could potentially push the interbank lower.
We will need interbank to trade and close back above support at 2.000 to increase the chances of the rate trading back up towards resistance at 2.09-2.1000.
If the interbank closes below the May low at 1.9700 there is no telling how far this market could fall - An alarming prospect - this is certainly a time for AUD buyers to exercise extra caution. Our advice to short-term buyers is to cover at least part of any requirement here to reduce risk, or to consider placing a protective stop order in the market to help protect against another potential adverse (downside market movement)
Clients who wish to hold out to see whether the rate picks up any further could consider placing an upper limit order into the market which will increase chances of securing a target rate of exchange.

AUD SELLERS:
It is now a fantastic opportunity for clients interested in selling AUD back into Sterling to consider securing a rate of exchange.
If you do not require delivery of your sterling immediately, we are able lock in a rate of exchange under a forward contract basis - this will enable clients to take delivery of their currency up to 12-months in the future
Clients who wish to hold out to see whether the rate will deteriorate further are strongly advised to consider placing an upper stop order in the market to protect against a potential upside recovery

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