Australian Dollar: USD/AUD (AUD=X) Rate Correction To Face Australian Employment Report

Australian Dollar: USD/AUD (AUD=X) Rate Correction To Face Australian Employment Report

Australian Dollar: USD/AUD (AUD=X) Rate Correction To Face Australian Employment Report

AUD/USD continues to retrace the sharp decline from the previous month as the Reserve Bank of Australia (RBA) abandons the dovish forward guidance for monetary policy, and the central bank may continue to change its tune over the coming months as officials insist that “smaller and less frequent purchases of government bonds will be required” if market conditions continue to improve.

The economic shock from COVID-19 may put pressure on the RBA to further support the economy especially as Standard and Poor’s cuts Australia’s credit rating outlook to ‘negative’ from ‘stable,’ but it remains to be seen if Governor Philip Lowe and Co. will continue to push monetary policy into uncharted territory as TreasurerFrydenberg pledges to “do what it takes to ensure that Australia bounces back stronger.”

In turn, a sharp decline in Australia Employment may do little to influence the monetary policy outlook as the RBA insists that the “coordinated monetary and fiscal response, together with complementary measures taken by Australia’s banks, will soften the expected contraction,” and the central bank may continue to tame speculation for lower interest rates as officials emphasize that “the cash rate was now at its effective lower bound.”

However, the RBA could be forced to deploy more unconventional tools as “it was likely that Australia would experience a very material contraction in economic activity, which would spread across the March and June quarters and potentially longer,” and Governor Lowe and Co. may sound more dovish at the next meeting on May 5 as “the Board is committed to doing what it can to support jobs, incomes and businesses as Australia deals with the coronavirus.”

Until then, AUD/USD may continue to retrace the sharp decline from March as it negates a bear flag formation and extends the series of higher highs and lows from the previous week, with the Relative Strength Index (RSI) highlighting a similar dynamic as it continues to track the upward trend carried over from the previous month.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 0.66.

The projected lower bound is: 0.62.

The projected closing price is: 0.64.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

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 92.3748. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 60.32. 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 16 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 120.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 16 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 buy 13 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed down -0.003 at 0.641. Volume was 67% below average (consolidating) and Bollinger Bands were 87% wider than normal.

Open     High      Low     Close     Volume___
0.644 0.644 0.640 0.641 24,347
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 0.62 0.64 0.67
Volatility: 17 22 13
Volume: 104,139 91,673 65,345

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 4.7% below its 200-period moving average and is in an upward 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 moderate flows of volume into AUD= (mildly bullish). Our trend forecasting oscillators are currently bullish on AUD= and have had this outlook for the last 4 periods.

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