Australian Dollar: USD/AUD (AUD=X) helped by a lift in US bond yields
The main them of Monday’s session was broad based US dollar strength, helped by a lift in US bond yields despite another weak reading on US factory orders in November.
“AUD/USD eased modestly in line with the stronger USD,” said Joseph Capurso, Senior Currency Strategist at the Commonwealth Bank.
“With the increase in US yields in recent days, the Australia US two-year bond spread eased back down to 74 basis points (bps). While the bond spread is not as low as 91bps reached in November, it will bear down on AUD.”
While the greenback’s strength weighed on the Aussie, it put in a better performance against the crosses, rising modestly against the offshore traded yuan, British pound and New Zealand dollar.
The gains in the Aussie came despite another plunge in Australian building approvals in December and news that Australian job advertisements turned negative in year-ended terms for the first time since mid-2015 in January.
While it attracted plenty of headlines and analysis, there was little reaction to the release of the final report into Australia’s banking royal commission, suggesting that traders don’t believe it will have a meaningful impact on the broader Australian economy beyond what’s already been seen.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 0.72.
The projected upper bound is: 0.73.
The projected lower bound is: 0.71.
The projected closing price is: 0.72.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 24 white candles and 25 black candles for a net of 1 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 60.5152. This is not an overbought or oversold reading. The last signal was a sell 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 56.42. 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 31 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 sell 1 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 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed up 0.000 at 0.723. Volume was 20% below average (neutral) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume___
0.723 0.726 0.719 0.723 90,846
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: 12 11 11
Volume: 103,200 109,386 108,063
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 0.8% below its 200-period moving average and is in an upward 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 bullish on AUD= and have had this outlook for the last 17 periods.
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