Mixed-to-Better News Can’t Save the Australian Dollar: USD/AUD (AUD=X)
The Australian Dollar reacted to mixed economic news by posting a choppy, two-sided trade before setting lower for the week.
The Aussie edged lower shortly after the Reserve Bank released the minutes of its April meeting that indicated a dovish tone in the policy review.
The minutes showed that policymakers saw a marked slowdown in the Australian GDP that offset the sustained labor market growth. The minutes also revealed that policymakers expect inflation to remain muted for some time. Additionally, the minutes disclosed the RBA discussed interest-rate cuts at its April board meeting and concluded there was “not a strong case” for an adjustment in the near term.
RBA board members conceded interest rates were unlikely to need to rise in the near future and decided standing pat would allow it to be “a source of stability and confidence.” In doing so, it noted the impact of further easing would be “smaller than in the past” because of high household debt and declining property prices.
The AUD/USD was also boosted by data from China which showed its economy grew at a 6.4 percent annual pace in the first quarter, above expectations for a 6.3 percent growth rate. Additionally, Industrial Production rose 8.5%, beating the 5.6% forecast. Retail Sales rose 8.7%, better than the 8.3% estimate.
Finally, the Aussie Dollar had a mixed reaction to Australian jobs data. The Employment Change report showed a total 25,700 new jobs were created in March, surging past expectations for a rise of 12,000. Most impressive was that all of the increase was led by full-time work with part-time decreasing 22,600.
Additionally, the unemployment rate rose to 5.0 percent in March from an eight-year trough of 4.9 percent the previous month as the participation rate climbed to 65.7 percent in a sign more people went looking for work.
Although traders are pricing in an RBA rate cut for later in the year, the employment report may have bought the central bank a little time. The AUD/USD price action suggests that traders may have increased bets the RBA will not rush to ease rates even though the broader economy has seemingly lost momentum.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 0.71.
The projected upper bound is: 0.72.
The projected lower bound is: 0.71.
The projected closing price is: 0.71.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 white candles.
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.
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 26.7490. 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 50.96. 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 85 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 -3. This is not a topping or bottoming area. The last signal was a sell 2 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 buy 26 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.002 at 0.714. Volume was 28% below average (neutral) and Bollinger Bands were 37% narrower than normal.
Open High Low Close Volume___
0.714 0.716 0.713 0.714 73,359
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.72 0.71 0.72
Volatility: 8 8 10
Volume: 91,128 99,815 107,528
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 0.7% below its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 19 periods.
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