Australian Dollar: USD/AUD (AUD=X) strong gains against most major currencies

Australian Dollar: USD/AUD (AUD=X) strong gains against most major currencies

Australian Dollar: USD/AUD (AUD=X) strong gains against most major currencies

The Australian dollar surged on Wednesday as doubts about the pace of rate hikes from the US Federal Reserve resurfaced.

After doing very little for the majority of the session, the AUD/USD jackknifed higher in North American trade, fueled by remarks from US Federal Reserve Chair Jerome Powell that raised fresh doubts about just how many rate hikes the Fed may deliver next year.

“Powell said interest rates are ‘just below the broad range of estimates of the level that would be neutral for the economy’,” said Richard Grace, Chief Currency Strategist at the Commonwealth Bank.

The neutral level for interest rates is the point where they don’t add or detract to economic activity. In October, Powell suggested the Fed funds rate was a “long way” from being neutral.

Powell also acknowledged that “the economic effects of our gradual rate increases are uncertain, and may take a year or more to be fully realised,” adding to speculation as to whether the Fed will deliver three rate increases next year as the median FOMC forecast suggested in September.

Powell’s remarks saw the US dollar slump against all major currencies, especially those in emerging markets as well as the Australian and New Zealand dollars. A sharp drop in US 2-year bond yields, which fell from 2.843% to as low as 2.797% in response to the remarks, helps fuel the weakness in the greenback.

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: 0.72.

The projected closing price is: 0.73.

Candlesticks

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 24 white candles and 26 black candles for a net of 2 black candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 71.3890. This is not an overbought or oversold reading. The last signal was a sell 7 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 60.48. 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 146 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 145.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 7 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 buy 0 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed up 0.001 at 0.732. Volume was 13% above average (neutral) and Bollinger Bands were 31% narrower than normal.

Open High Low Close Volume___
0.730 0.734 0.729 0.732 125,170

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 0.73 0.72 0.74
Volatility: 12 11 10
Volume: 120,063 118,491 105,885

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 1.4% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into AUD= (mildly bullish). Our trend forecasting oscillators are currently bullish on AUD= and have had this outlook for the last 17 periods.

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