Australian Dollar: USD/AUD (AUD=X) weak consumer inflation report
Sparking the sell-off in the AUD/USD on Wednesday was a weak consumer inflation report. The consumer price index (CPI) showed that core inflation at 1.4 percent had drifted to its lowest level in at least 16 years. Furthermore, inflation has been stuck below the RBA’s 2-3 percent target band for three years.
In the minutes of its last monetary policy statement, the RBA said it would be “appropriate” to cut rates if unemployment rose and inflation “did not move any higher”.
Yesterday’s report drove up expectations for an RBA rate cut later this year. “The downward surprise to core inflation in the first quarter leaves the RBA with little choice but to cut the cash rate by 25 basis points at its May meeting,” ANZ economists Hayden Dimes and David Plank wrote in a note to clients. They also called for a second rate cut to take place in August. This would drive the RBA’s benchmark interest rate to 1 percent.
Another analysts, Shayne Heffernan, said market expectations of the RBA cutting rates next month soared to 64 percent. He also said he believes the widely-expected rate cut will happen in June, with a second cut to happen by the end of this year.
“A 25 basis point RBA rate cut in June is fully priced and a second 25 basis point cut is priced by the end of 2019,” he said.
ANZ and Commonwealth join the other two major banks, Westpac and NAB, in predicting two interest rate cuts this year.
Overall, the bias in prices is: Downwards.
By the way, prices are vulnerable to a correction towards 0.71.
The projected upper bound is: 0.71.
The projected lower bound is: 0.69.
The projected closing price is: 0.70.
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 23 white candles and 25 black candles for a net of 2 black candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
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 12.8677. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 11 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 34.66. 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 89 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 -157.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.
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 0.000 at 0.701. Volume was 100% below average (consolidating) and Bollinger Bands were 1% narrower than normal.
Open High Low Close Volume___
0.701 0.701 0.701 0.701 251
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.71 0.71 0.72
Volatility: 7 8 10
Volume: 83,520 96,999 106,665
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 2.3% below its 200-period moving average and is in an downward trend. Volatility is Our volume indicators reflect volume flowing into and out of AUD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AUD= and have had this outlook for the last 1 periods.
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