Australian Dollar: USD/AUD (AUD=X) Bushfires Send Consumer Confidence Lower as Mini Retail Boom Rolls Over
The Australian Dollar is trading flat against the U.S. Dollar on Wednesday after early session weakness drove the currency into its lowest level since December 11. This means that the entire Phase One U.S.-China trade deal premium has been wiped out. Meanwhile the New Zealand Dollar is drifting lower for a fourth straight session. It briefly pierced the January 15 at .6584 before rebounding slightly.
Bushfires Send Consumer Confidence Lower as Mini Retail Boom Rolls Over
Australia’s devastating bushfire season has driven already weak consumer confidence even lower, indicating the mini-boom in retail sales we saw last year could be coming to an end soon.
Australia’s consumer confidence declined in January as devastating bushfires weighed on economic growth outlook, survey data from Westpac showed on Wednesday. The Westpac-Melbourne Institute Index of Consumer Sentiment declined 1.8 percent to 93.4 in January from 95.1 in December.
A reading of 100 is the breakeven point between optimism and pessimism – the lower the number, the grimmer the outlook.
Westpac chief economist Bill Evans said the result was hardly surprising.
“Since the lows of the global financial crisis, where the index averaged only 89 over a 15-month period from March 2008 to May 2009, there have only been seven monthly readings where the index has printed below 93.4,” Mr. Evans said.
“In short, confidence has been further eroded by the bushfires but, because the index was starting from such a modest level, it was likely that the fall in confidence would be less than some may have expected.”
Mr. Evans said the pessimism is consistent with the generally lackluster reports on consumer spending.
“The surprising jump in retail sales which was reported for November is likely to have largely reflected the ‘Black Friday’ effect.”
The bearish consumer confidence news is likely to keep a lid on the AUD/USD on Wednesday. If there is an intraday rally, it is likely to be driven by short-covering ahead of Thursday’s Employment Change and Unemployment Rate reports.
Employment Change is expected to show the economy added 12.2K jobs in December. The Unemployment Rate is expected to remain at 5.2%.
Better-than-expected numbers could trigger a short-covering rally, knocking out some of the weaker bears. However, this will only give some of the stronger bears another opportunity to short the Aussie Dollar at more favorable price levels.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 0.69.
The projected lower bound is: 0.68.
The projected closing price is: 0.68.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 22 white candles and 26 black candles for a net of 4 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.
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 15.4932. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 7 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 39.04. 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 sell 14 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 -138.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 8 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 sell 11 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.000 at 0.684. Volume was 2% below average (neutral) and Bollinger Bands were 22% wider than normal.
Open High Low Close Volume___
0.684 0.686 0.682 0.684 49,017
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.69 0.69 0.69
Volatility: 5 7 7
Volume: 51,652 45,590 65,303
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 0.6% below its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 6 periods.
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