Australian Dollar: USD/AUD (AUD=X) Australian central bank governor says future rate cut is possible
Philip Lowe told the National Press Club in Sydney on Wednesday, that the chance of the rate cut is more likely than it used to be, changing the RBA’s tone slightly.
‘Looking forward there are scenario where the outlook in the cash rate is up and there are scenarios were its down.’ Lowe said.
He said they will be monitoring developments in the labour market closely.
Lowe’s speech indicated it’s equally possible the next move in the interest rate would be up if more Australians found jobs and their wages rose.
‘Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today the probabilities appear to be more evenly balanced.’ Lowe said. If inflation lifts, then Lowe indicated interest rates would lift at some point.
Lowe’s speech comes after the central bank announced on Tuesday it would keep the cash rate at a record low of 1.5%, marking its 30th month unchanged.
The rate was last cut in August 2016 and has not risen since November 2010.
Lowe said the strength of the Australian housing market and how much people were spending would become the greatest source of uncertainty in the coming years.
Lowe was not certain what effect the housing correction would have on household consumption.
‘What we are seeing looks to be manageable adjustment in the housing markets of Sydney and Melbourne,’ he said.
Australian dollar falls upon the speech
AUD/USD has been volatile over the past 24 hours, shifting directly after Lowe’s speech.
After the RBA’s upbeat statement yesterday it rallied slightly, then changed again after Lowe’s switch in tone.
Investors were cautious, sending the AUD/USD 1% lower on Wednesday.
AUD/USD hit a low of 0.7160 directly after Lowe’s speech.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 0.72.
The projected upper bound is: 0.72.
The projected lower bound is: 0.70.
The projected closing price is: 0.71.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 black candles.
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 37.5758. This is not an overbought or oversold reading. The last signal was a sell 2 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 44.23. 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 32 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 -41. This is not a topping or bottoming area. The last signal was a sell 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 5 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.012 at 0.712. Volume was 7% below average (neutral) and Bollinger Bands were 28% narrower than normal.
Open High Low Close Volume___
0.723 0.725 0.711 0.712 106,391
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.72 0.72 0.73
Volatility: 16 11 11
Volume: 104,110 109,161 108,163
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 2.3% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of AUD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on AUD= and have had this outlook for the last 18 periods.
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