Australian Dollar: USD/AUD (AUD=X) market now sees 100% chance of RBA rate cut in 2019

Australian Dollar: USD/AUD (AUD=X) market now sees 100% chance of RBA rate cut in 2019

Australian Dollar: USD/AUD (AUD=X) market now sees 100% chance of RBA rate cut in 2019

The Australian Dollar recovered off earlier lows Thursday after official data revealed a sharp increase in the January trade surplus, which offered support to the Aussie even after other figures showed household spending growth was underwhelming early in the New Year. 

Strong trade data was enough to lift the AUD/USD rate off of Wednesday’s lows and also encouraged the Pound-to-Australian-Dollar rate to retreat from what was a fresh six-month high scored in the previous session, but some local analysts say it won’t be long before the Aussie suffers fresh losses.

Australia’s trade surplus rose to $4.55 bn during January, from $3.77 bn previously, when markets had looked for a decline to $2.85 bn. This was the second largest surplus on record, which came after exports grew faster than imports in the New Year. 

Imports of goods and services rose by 3% to $35.38 bn in January while exports rose 5% to $39.93 bn although much of the latter increase was due to improved international demand for gold.

“AUD/USD lifted back towards 0.75 in the Asian trading session because the Australian January trade surplus rose to its second highest level on record,” says Richard Grace, head of currency strategy at Commonwealth Bank of Australia. “Strong trade data more than offset the impact of lower than expected January retail sales.”

Trade balance data measures the difference in value between a nation’s imports and its exports. Currency markets care about it because the data provides insight into supply and demand of a currency in the “real economy”, while also giving a steer on the likely pace of GDP growth in a given period.

A narrowing deficit suggests either that exports and their associated demand for a currency are rising, or that imports and their associated supply of a currency are falling. Both are typically good for a currency while a steadily narrowing trade surplus, or a widening deficit, is a negative influence.

The size and trajectory of a trade surplus or deficit is important for economic growth because imports are a subtraction in the calculation of GDP, while exports represent a credit to the value of economic output. As a result, rising exports and, or, falling imports can help boost the economy.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 0.71.

The projected lower bound is: 0.69.

The projected closing price is: 0.70.

Candlesticks

A black body occurred (because prices closed lower 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 24 white candles and 25 black candles for a net of 1 black candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 12.9901. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 10 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 36.91. 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 53 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 -176.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 period(s) ago.

MACD

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 down -0.002 at 0.702. Volume was 11% below average (neutral) and Bollinger Bands were 30% narrower than normal.

Open High Low Close Volume___
0.703 0.705 0.700 0.702 99,568

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 0.71 0.71 0.72
Volatility: 8 11 11
Volume: 106,426 105,277 108,375

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.

Summary

FOREX AUD= is currently 3.1% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 16 periods.

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