Australian Dollar: USD/AUD (AUD=X) Flat As Global Trading Volumes Thin
The Australian Dollar exchange rates remained largely flat on Monday as trading volumes were thin due to the closure of US markets for Martin Luther King Day. Despite the global risk-on sentiment, the ‘Aussie’ opened this week down for the third consecutive week, with the Australian Dollar US Dollar exchange rate currently trading flat at $0.6865.
While encouraging signs from China provided some support for AUD, the currency was left largely muted against a handful of currencies.
On Monday, Chinese Minister of Industry and Information Technology Wei said the country is confident of maintaining steady industrial growth over the course of 2020 despite huge pressures.
Australian Dollar Exchange Rates Left Flat on Hard Brexit Fears
The risk-sensitive Australian Dollar remained flat against the Pound following an upswing in fears the UK will suffer a hard Brexit.
This left the Australian Dollar Pound (AUD/GBP) exchange rate trading at around £0.5282 on Monday.
UK Finance Minister, Sajid Javid sparked fears of weak ties between the UK and European Union after Brexit.
Saturday saw Javid say the UK would not commit to sticking to the bloc’s rules in post-Brexit discussions, a threat to many businesses that wish to ease cross-border checks once the transition period concludes at the end of the year.
Commenting on this, RBC Capital Markets chief currency strategist Adam Cole noted:
‘It’s about the UK diverging from Europe, and that would necessarily result in limiting access to European markets. Markets are taking that negatively.’
50% Chance US-China ‘Phase One’ Deal Will Fall Apart
The Australian Dollar was able to benefit from the ‘phase one’ US-China trade deal as the truce is good for global confidence.
However, on Monday reports suggested that there is a 50% chance the deal could fall apart in one year, weighing on AUD.
Richard Martin, managing director at management consulting firm IMA Asia told CNBC’s ‘Squawk Box Asia’:
‘There’s a very poor track record on government-mandated trade flows working out and that’s what we got right now.
‘We don’t like governments to go out and say this is the volume of trade and this is the price point we want done at — that’s meant to be said at the markets’
He also added that this deal allows U.S. Trade Representative, Robert Lighthizer, to ‘pretty much determine when China’s breaking the rules and inflict any penalty he wants.’
Australian Dollar Outlook: Will Consumer Confidence Send AUD Lower?
Looking ahead, the Australian Dollar (AUD) could slide against a handful of currencies following the release of Westpac’s consumer confidence data.
If January’s confidence slumps further than expected, the ‘Aussie’ is likely to fall.
Meanwhile, the ‘Aussie’ could remain under pressure as investors predict the Reserve Bank of Australia (RBA) will cut rates at the start of next month.
Markets will likely focus on this week’s Australian labour market data, and if this disappoints, the chance of a rate cut from the RBA is likely to increase, weighing on AUD.
Commenting on this, Commonwealth Bank of Australia’s strategist, Joseph Capurso, said:
‘We expect the RBA will deliver more policy stimulus with a 25bp rate cut on 4 February. Australian futures are pricing a 55% chance of a cut. A ‘high’ unemployment rate above 5% will reinforce the view that further stimulus is required to push unemployment towards the RBA’s 4.5% full employment target.’
Overall, the bias in prices is: Sideways.
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 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.
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 32.9004. This is not an overbought or oversold reading. The last signal was a buy 5 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 44.61. 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 12 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 -72. This is not a topping or bottoming area. The last signal was a buy 6 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 9 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed up 0.000 at 0.687. Volume was 13% below average (neutral) and Bollinger Bands were 10% wider than normal.
Open High Low Close Volume___
0.687 0.689 0.685 0.687 44,174
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.69 0.69 0.69
Volatility: 8 7 7
Volume: 53,058 45,382 65,746
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 0.2% 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 4 periods.
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