Australian Dollar: USD/AUD (AUD=X) rises after U.S. shutdown averted, White House talks Xi meeting

Australian Dollar: USD/AUD (AUD=X) rises after U.S. shutdown averted, White House talks Xi meeting

Australian Dollar: USD/AUD (AUD=X) rises after U.S. shutdown averted, White House talks Xi meeting

The Australian Dollar rose Tuesday as investors cheered an agreement struck overnight in Washington that will avert a second 2019 government shutdown, which has buoyed so-called risk assets including the Antipodean currency.

President Donald Trump has secured partial funding for his proposed wall along the border with Mexico and it’s now hoped he will sign a bill to fund the federal government beyond this weekend, averting the need for it to close. 

“This has raised hopes that Congress could pass a spending bill – if President Trump approves it – before the Friday deadline. If so, this should prove supportive for the dollar,” says Lee Hardman, a currency analyst at MUFG.

Tuesday’s agreement comes closely behind the longest government shutdown in history, which ended in late January after an apparent capitulation by President Trump, who had allowed the government to close after opposition lawmakers refused to support a spending bill that contained funding for the wall. 

The White House is also keen to meet Chinese President Xi Jingping, adviser Kellyanne Conway told Fox News Monday, ahead of a March 01 deadline that will see U.S. tariffs on around $200 bn of imports from China more than double to 25% if a deal addressing “unfair trading practices” isn’t reached by then. 

“Markets again have a risk on tone overnight (S&P future +0.5%), with AUD outperforming (0.7075), despite gloomy domestic housing data (see AUD) and JPY down (USD/JPY 110.60) against all G10 currencies,” says Adam Cole, chief FX strategist at RBC Capital Markets. “The positive risk tone primarily reflects last night’s tentative agreement on US border security, including much reduced funding for the wall, which should prevent another government shutdown this week. More positive noises on US-China trade are also helping.”

President Trump had said last week there are no plans to meet Jingping ahead of March 01, leading markets to speculate the talks may have been falling apart just as the deadline nears. That put pressure on the Aussie at the time. 

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.

Candlesticks

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.

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 10.9837. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 6 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 42.26. 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 36 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 -103.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 sell 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed up 0.002 at 0.708. Volume was 44% below average (neutral) and Bollinger Bands were 4% narrower than normal.

Open High Low Close Volume___
0.706 0.709 0.705 0.708 63,445

Technical Outlook
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: 97,141 106,895 108,084

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 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 22 periods.

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