Australian Dollar: USD/AUD (AUD=X) RBA might well be forced to step in soon and actually cut official interest rates
The AUD/USD might have seen a bit of a resurgence in the last week or so, but there are rumblings that the RBA might well be forced to step in soon and actually cut official interest rates.
We are starting to see some of the top-tier banks and pension funds in Australia start making the case that they believe the next move in interest rates will be down as the property market in Australia is starting to look like it is going to fall further than many expected.
In the last 5 years, property in Sydney and Melbourne has more than doubled in value. Led by low-interest rates, easy access to finance and a raft of foreign investors, predominantly out of China.
However, now the cycle appears to have turned. Morgan Stanley has come out and said it is now expecting the next RBA move to be down, to ease pressure on falling house prices. A huge portion on Australia’s GDP comes indirectly through property and Australia boasts some of the highest property prices in the world.
Currently, prices have fallen 12% from their peak with experts suggesting the falls might get considerably worse.
This week there is also the release of the Royal Commission (an investigation effectively) into the banking and finance sector which has led to tighter credit conditions all around the country.
And dispite an uptick in CPI this past week, inflation is still by no means testing the 2-3% band that would justify a rate hike. So there is some credence to the argument from Morgan Stanley.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 0.72.
The projected upper bound is: 0.74.
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 25 white candles and 24 black candles for a net of 1 white 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 78.3333. This is not an overbought or oversold reading. The last signal was a sell 0 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 58.99. 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 30 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 111.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. 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 buy 3 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.000 at 0.725. Volume was 98% below average (consolidating) and Bollinger Bands were 30% narrower than normal.
Open High Low Close Volume___
0.724 0.725 0.724 0.725 1,917
Short Term: Overbought
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: 96,832 108,551 107,603
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 0.6% 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 16 periods.
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