Australian Dollar: USD/AUD (AUD=X) RBA minutes and Lowe speech threaten AUD’s gains
The Australian Dollar was riding high at the top of the G10 league table Monday following a surprise win for the coalition government in Sunday’s general election, although analysts are saying that gains for the Antipodean currency could prove short-lived.
Australia’s Liberal Party and National Party coalition took the markets by surprise at the start of the new week when it appeared to have won Sunday’s general election against all of the odds.
The coalition has so-far gained 2 seats, taking their total to 76 out of 151, although the national Broadcaster has predicted a total of 77.
All opinion polls had suggested strongly that a change of government was in the pipeline with a less pro-business Labour Party likely to have ruled the roost following the poll. The result is also a win for markets.
Australia’s coalition is equivalent to a UK Conservative Party government being propped up by smaller, right of centre parties. It has advocated an equivalent of the UK Help to Buy programme to Australians onto the property ladder and its tax policies are seen as more business friendly than those of the opposition.
“The Coalition’s victory is unlikely to have major near-term fiscal implications, as the Government’s policy platform is largely a continuation of existing policy settings,” says Andew Boak, chief economist for Australia and New Zealand at Goldman Sachs. “That said, we expect today’s unexpected victory for the incumbent Government to be a moderate positive shock to sentiment in the corporate sector and a more meaningful one in the housing sector.”
“AUD/USD nearly reached the 78.6% Fibonacci retracement at .6857 before stabilising. Immediate bearish pressure should remain in play while no advance above the 50% retracement and the May 10 high at .7016/18 is seen,” says Shayne Heffernan, CEO and Founder of Heffx.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 0.71.
The projected upper bound is: 0.70.
The projected lower bound is: 0.68.
The projected closing price is: 0.69.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 7 black candles for a net of 5 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 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 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 15.6333. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 15 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 34.28. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 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 -95. This is not a topping or bottoming area. The last signal was a buy 0 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 19 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed up 0.004 at 0.691. Volume was 16% below average (neutral) and Bollinger Bands were 17% wider than normal.
Open High Low Close Volume___
0.693 0.694 0.689 0.691 82,904
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.69 0.71 0.71
Volatility: 7 8 10
Volume: 95,920 94,220 106,402
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 3.4% below its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect moderate flows of volume out of AUD= (mildly bearish). Our trend forecasting oscillators are currently bearish on AUD= and have had this outlook for the last 17 periods.