The AUDUSD reversed following completion of the ending diagonal in July and the decline has been impressive. Diagonals are usually fully retraced, so the initial bearish target is .7265.
The highly yield-sensitive Australian Dollar has fallen significantly through recent months of trading, as interest rate traders now forecast noticeably lower Australian interest rates through the year ahead. Current Credit Suisse interest rate quotes show expectations of 153 basis points in RBA cuts, while the US Federal Reserve is predicted to cut by a modest 3 basis points through the same period. Such rate changes would leave the Australian Dollar-US Dollar yield differential 1.50 percentage points lower, and the highly yield-sensitive AUDUSD pair may suffer as a result.
Australian Dollar Futures Show AUDUSD Could Fall Further
Written by Jamie Saettele, Senior Strategist and David Rodríguez, Quantitative Analyst for DailyFX.com
To contact the authors of this report, please e-mail research@dailyfx.com.