Australian Dollar: USD/AUD (AUD=X) Westpac Predicts Two RBA Rate Cuts, QE in 2020
The Australian and New Zealand Dollars are inching lower on Wednesday on low volume. The tight trading range this week suggests many of the major players are on the sidelines ahead of the U.S. bank holiday on Thursday. Aussie and Kiwi investors have been showing little response to the optimistic news about U.S.-China trade relations. Instead, the focus has been on central bank expectations.
The big news on Wednesday is Westpac Bank’s prediction calling for Australia’s central bank to cut rates twice in 2020, while introducing Quantitative Easing.
The Reserve Bank of Australia (RBA) is likely to cut interest rates twice next year, taking the cash rate to 0.25% by June 2020, and then introduce quantitative easing (QE), Westpac Banking Corp said on Wednesday in a change to its house forecasts.
Westpac’s previous forecast was for the policy rate to fall to 0.5%. The cash rate is currently at a record low of 0.75% after three cuts of 25 basis points since June this year.
The revised outlook followed a speech by Reserve Bank of Australia (RBA) Governor Philip Lowe on Tuesday, in which he said he did not expect to have to use QE in Australia, but that it could happen if the cash rate was cut to 0.25%.
“The RBA has indicated it is prepared to push the cash rate to 0.25%,” Westpac chief economist Bill Evans said in a report.
“Westpac has always argued that monetary easing will be necessary in 2020 but assessed that the RBA would see 0.5% as the effective lower bound.”
Overall, the bias in prices is: Sideways.
The projected upper bound is: 0.69.
The projected lower bound is: 0.67.
The projected closing price is: 0.68.
A black body occurred (because prices closed lower 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 23 white candles and 27 black candles for a net of 4 black candles.
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 23.9126. This is not an overbought or oversold reading. The last signal was a buy 1 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 40.88. 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 79 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 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 13 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.001 at 0.678. Volume was 39% below average (neutral) and Bollinger Bands were 13% narrower than normal.
Open High Low Close Volume___
0.679 0.679 0.677 0.678 37,670
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.68 0.68 0.69
Volatility: 6 7 8
Volume: 44,733 53,572 76,044
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 2.2% below its 200-period moving average and is in an downward 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 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 5 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.
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