Australian Dollar: USD/AUD (AUD=X) investors making the necessary adjustments to the possibility of a Fed rate hike
Fed Fund futures are currently pricing in 50% chance of a cut in September and a full 25 basis-point cut by December. Traders are also looking for another rate cut for next year. As the trade war drags on the data-dependent Fed will have an easy choice in cutting rates. To some the question is not will they deliver a shift, but when.
The above statement is driving the price action at this time, and encouraging Aussie and Kiwi short-sellers to aggressively cover their positions. Traders should note that the reversals to the upside are being fueled by position-squaring and short-covering, and not a change in policy by the RBA and RBNZ. Therefore, the rally is likely to be short-lived and likely to last until investors make the necessary adjustments to the possibility of a Fed rate hike.
This is a holiday-shortened week in the U.S. because of Monday’s Memorial Day holiday. The major report in the U.S. will be Thursday’s preliminary GDP report. It is expected to come in at 3.1%, slightly below the 3.2% previously reported.
Traders will also get the opportunity to react to the RBNZ Financial Stability report and a speech by RBNZ Governor Orr early Wednesday. Early Thursday, look for a reaction to the Annual Budget.
In Australia, the focus will be on Thursday’s Buildings Approvals and Private Capital Expenditure reports.
I don’t think the events in New Zealand and Australia will have too much of an impact on the AUD/USD and NZD/USD with traders primarily focused on the U.S. economy at this time. Therefore, look for greater reactions to the U.S. data especially to reports that deal with future growth.
Weaker-than-expected U.S. data will likely exert the greatest upside pressure on the Aussie and Kiwi.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 0.70.
The projected upper bound is: 0.70.
The projected lower bound is: 0.68.
The projected closing price is: 0.69.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 74.5617. This is not an overbought or oversold reading. The last signal was a buy 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 42.97. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 5 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 3. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed up 0.001 at 0.693. Volume was 99% below average (consolidating) and Bollinger Bands were 11% wider than normal.
Open High Low Close Volume___
0.693 0.694 0.692 0.693 655
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.69 0.70 0.71
Volatility: 6 8 10
Volume: 80,164 91,868 105,360
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX AUD= is currently 2.8% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AUD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AUD= and have had this outlook for the last 22 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.