Australian Dollar: USD/AUD (AUD=X) remains pressured following a dovish shift from the RBA last week
The Australian dollar remains pressured following the Reserve Bank of Australia’s (RBA) dovish shift last week.
After starting the week at .7250, the AUD/USD ended it at .7088, representing a decline of 2.2%. It was the largest weekly decline in percentage terms since early October last year.
The steep decline, leaving the AUD/USD briefly trading at the lowest level since early January, was largely driven by shift in mindset from the RBA with the bank delivering a raft of dovish commentary and forecasts in the latter parts of the week.
Financial markets now deem a rate cut by the end of the year as a certainty, contributing to renewed downside pressure on Australian government bond yields. The compression in yields has weighed on the Aussie dollar, more than offsetting continued strength in commodity prices and reduced levels of financial market volatility.
“The big question this week is whether the AUD/USD has enough depreciation forces on it to send it below the psychological level of 0.7000,” says Richard Grace, Chief Currency Strategist at the Commonwealth Bank.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 0.72.
The projected upper bound is: 0.72.
The projected lower bound is: 0.70.
The projected closing price is: 0.71.
A white body occurred (because prices closed higher 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 23 white candles and 26 black candles for a net of 3 black candles.
A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 11.6394. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 5 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 41.46. 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 35 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 -97. 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 2 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.000 at 0.709. Volume was 63% below average (consolidating) and Bollinger Bands were 11% narrower than normal.
Open High Low Close Volume___
0.709 0.711 0.708 0.709 42,030
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.72 0.71 0.73
Volatility: 14 11 11
Volume: 95,951 106,937 108,015
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 2.7% below its 200-period moving average and is in an upward trend. Volatility is high 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 21 periods.