Australian Dollar: USD/AUD (AUD=X) rise in the unemployment rate in April and China dashing hopes the trade spat would be ended soon
Australia’s dollar jumped at the market open after the nation’s center-right government clung to power in a surprise election victory at the weekend.
The Aussie was indicated 0.8 percent stronger in early trading at 69.26 U.S. cents after last week sinking to the weakest level since January.
As Labor’s tax proposals are off the table, giving some relief to the housing market, and with the incumbent government being viewed as stronger economic managers, business sentiment is expected to improve, said Andrew Ticehurst, Sydney-based rate strategist at Nomura Holdings Inc. It’s a net positive for Australian assets, he wrote in note to clients dated May 19.
Option traders had turned more bearish on the Aussie than any other G-10 currency as the risk-sensitive asset suffers from the sudden escalation in U.S.-China trade tensions and a slowing economy. Investors priced around a 70% chance the Reserve Bank of Australia will cut interest rates in June, overnight index swaps showed.
The Aussie sank to 68.68 cents last week amid a rise in the unemployment rate in April and China dashing hopes the trade spat would be ended soon.
A speech by Reserve Bank Governor Philip Lowe on Tuesday will be critical for the near-term direction of the Australian dollar and rates, Ticehurst said. Lowe has previously used speeches to provide monetary policy guidance, he said.
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.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend.
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.
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 20.2156. This is not an overbought or oversold reading. The last signal was a buy 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 37.48. 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 -75. 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 0.006 at 0.692. Volume was 98% below average (consolidating) and Bollinger Bands were 14% wider than normal.
Open High Low Close Volume___
0.693 0.694 0.691 0.692 1,996
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.69 0.71 0.71
Volatility: 8 8 10
Volume: 87,829 92,602 105,997
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= gapped up today (bullish) on light volume. Possibility of a Common Gap which usually coincides with a lack of interest in the security. Common Gaps are fairly irrelevent for forecasting purposes. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FOREX AUD= is currently 3.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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.
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