Australian Dollar: USD/AUD (AUD=X) faces losses over coming days
The Australian Dollar crept higher against many rivals in the morning session Thursday but is being tipped as vulnerable to fresh losses over the coming days, with strategists at Westpac saying the market is unprepared for a likely Reserve Bank of Australia (RBA) interest rate cut next week.
Reserve Bank of Australia Governor Philip Lowe will announce the next interest rate decision at 05:30 next Tuesday and Westpac, one of Australia’s four largest lenders, is forecasting a further cut to the bank’s benchmark of borrowing costs from 1% to 0.75%. But the bank has also warned that investors are not fully prepared for this move.
The overnight-index-swap market, which enables investors to protect themselves against as well as speculate on changes in rates, implied on Thursday an October 01 cash rate of 0.80%. That’s above the 0.75% that’ll prevail if the RBA cuts Tuesday and suggests that some are unconvinced it will.
“We are comfortable with our long-held call for the RBA to cut the cash rate to 0.75% on Tuesday. A rate cut is about 75% priced, so A$ seems vulnerable to further decline,” says Sean Callow, a strategist at Westpac. “Risks to AUD/USD are of 0.6700 and below on the week but not necessarily on a daily close basis.”
Overall, the bias in prices is: Downwards.
The projected upper bound is: 0.68.
The projected lower bound is: 0.67.
The projected closing price is: 0.67.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 20 white candles and 29 black candles for a net of 9 black candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 25.6226. This is not an overbought or oversold reading. The last signal was a buy 1 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 39.81. 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 35 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 -107.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. 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 sell 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed up 0.000 at 0.675. Volume was 7% below average (neutral) and Bollinger Bands were 0% wider than normal.
Open High Low Close Volume___
0.675 0.678 0.674 0.675 67,661
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.68 0.68 0.70
Volatility: 6 7 9
Volume: 66,285 68,818 87,420
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 3.5% 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 14 periods.
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