The Australian dollar (A$) (AUDUSD) has risen 3% against the US dollar in a month.
The recent rise of the Australian dollar goes against the longer-term movements in the currency, which is down from over $1.05 in 2013.
The recent rises in the Australian dollar have coincided with suggestions that central banks around the world could send interest rates higher sooner rather than later.
According to Sydney Morning Herald, 16 of the 26 economists surveyed said Australia’s interest rates will remain unchanged until 2019. Five economists predicted an increase in official interest rates tomorrow.
If interest rates head higher, the Australian dollar could find strength.
However, in my opinion, rising interest rates appear to be a couple years off given the uncertainty in the housing and employment sectors, as well as the resources sector. Not to mention our record household debt levels.
Will the AUD fall?
The long-run average level of the AUD is around the mid-seventies. Currently, the Aussie dollar sits at 76.8 US cents.
While many importers and travellers will be welcoming the higher Aussie dollar. A higher Aussie dollar is typically bad news for Australian mining shares like BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO), which sell their product in US dollars.
However, there may be more reasons to be negative on the Australian dollar. For example, the US economy appears to be firing on all cylinders while Aussie households are being squeezed by higher rates on mortgages. We also have record debt levels at a time when our banks, such as Commonwealth Bank of Australia (ASX: CBA), are raising interest rates.
Recent falls in commodity prices also paint a bleak outlook for our economy.
I think it’s too early to suggest interest rates will rise. However, it’s possible that just a ‘hint’ of rising interest rates will be enough to keep the Aussie dollar at elevated levels.
Overall, the bias in prices is: Upwards.
Short term: Prices are stalling.
Intermediate term: Prices are ranging.
By the way, prices are vulnerable to a correction towards 0.75.
The projected upper bound is: 0.78.
The projected lower bound is: 0.75.
The projected closing price is: 0.77.
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 28 white candles and 22 black candles for a net of 6 white candles.
An evening star occurred (this is a three-candle pattern). This is a bearish pattern than often signifies a major top.
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 79.4642. This is not an overbought or oversold reading. The last signal was a sell 0 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 62.83. 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 sell 105 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 123.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 10 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 3 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed down -0.004 at 0.765. Volume was 21% below average (neutral) and Bollinger Bands were 10% narrower than normal.
Open High Low Close Volume
0.768 0.770 0.764 0.765 65,915
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 0.76 0.75 0.75
Volatility: 7 9 10
Volume: 80,719 79,912 99,466
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 1.6% above 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 19 periods.
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