We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Bitcoin
Mixed
More View more
Real Time News
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Silver: 0.63% Oil - US Crude: -0.02% Gold: -0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/oNEkMGVhyX
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.17% 🇨🇦CAD: 0.11% 🇪🇺EUR: 0.07% 🇳🇿NZD: -0.01% 🇨🇭CHF: -0.03% 🇯🇵JPY: -0.04% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/6TDJo3StbI
  • LIVE NOW: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.27%, while traders in Germany 30 are at opposite extremes with 84.48%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/Hp25WV8QCx
  • LIVE IN 30 MIN: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267
  • #NOK, #AUD and #SEK are expected to be the most active G10 currencies vs USD with 1-week implied volatility at 7.35, 7.76 and 6.72, respectively
  • Tune in to @IlyaSpivak 's #webinar at 10:00 PM ET/3:00 AM GMT for insight on the cross market weekly outlook. Register here: https://t.co/E213bTtq5C https://t.co/Mh5NxU5BsU
  • RT @KyleR_IG: * PBOC OFFERS 1-YEAR MLF AT 3.15%, LOWERED FROM 3.25% PREVIOUSLY #ausbiz $cny
  • 🇨🇳 CNY New Home Prices (MoM) (JAN), Actual: 0.27% Expected: N/A Previous: 0.35% https://www.dailyfx.com/economic-calendar#2020-02-17
  • 🇨🇳 CNY New Home Prices (MoM) (JAN), Actual: 0.27% Expected: N/A Previous: 0.4% https://www.dailyfx.com/economic-calendar#2020-02-17
AUD/USD Channel Signals Potential Return of Risk Aversion

AUD/USD Channel Signals Potential Return of Risk Aversion

2010-07-27 18:27:00
John Rivera, Currency Analyst
Share:

The Australian dollar has seen support throughout July as strong corporate earnings and fading concerns over Europe have fueled broader optimism. The AUD/USD has seen its correlation with equity markets strengthen to 86% as the high yielder continues to benefit from risk appetite. Australia’s target rate stands at 4.50% which places it easily at the top of the majors and the most attractive for traders. An improved outlook for yields is also adding Aussie support following the RBA’s minutes from their last policy meeting as they left the door open for another rate hike. The central bank will look to the upcoming RBA rate decision for guidance on whether to continue tightening. Yet, with risks trends holding such considerable sway over direction the end of earnings season could lead to profit taking and a flight to safety, keeping the AUD/USD confined to its current channel.

Levels to Watch:

-Range Top: 0.9150(Trend, Pivot)

-Range Bottom: 0.8475 (Trend, Pivot)

AUDUSD_Channel_Signals_Potential_Return_of_Risk_Aversion_body_Picture_1.png, AUD/USD Channel Signals Potential Return of Risk Aversion

Suggested Strategy

  • Short: Place an entry at 0.9200
  • Stop: Set the stop to 0.9300-100 pips in risk
  • Target: The first target is 0.9000 followed by 0.8737-7/22 low

Trading Tip – The AUD/USD could already be at trend line resistance if we draw the upper bound form a lower base which should keep traders alert for a reversal. An intra-day head $ shoulder’s could be the pivot that we are looking for and if we see the pair fall below 0.8950 then we would consider a short at that level. However, risk appetite has been firm and expectations are for inflation to accelerate above the RBA’s target range of 2-3%, potentially returning bullish sentiment. We would wait for the post event risk price action to settle before taking a position. The 100-Day SMA at 0.8866 could be a potential support level to watch with the 20-Day SMA at 0.8729 as the next barrier.

Event Risk for Australia and U.S.

Australia Minutes from the RBA’s last policy meeting, where they left rates unchanged, indicated that the central bank will look to the upcoming second quarter consumer price index report as a guide for future monetary policy. Expectations are for inflation to have accelerated by 3.4% from 2.9% the quarter prior, which would place it above their target of 2-3%, raising the outlook for a rate hike and potentially providing Aussie support. Slower than expected price growth could sink the commodity dollar as speculation will rise that the RBA’s tightening cycle may come to an end.

U.S. – The U.S. durable goods orders for June are forecasted to increase by 1.0% which isn’t enough of an improvement to impact long-term outlooks, but if there is prevailing risk appetite the positive fundamental release could provide a boost. However, a shortfall in demand will add to the declining growth outlook for the U.S., potentially generating a flight to safety and dollar support. Meanwhile, the pace of U.S. growth in the second quarter is forecasted to have slowed to 2.5% from 2.7% the period prior. Dissipating government stimulus and the end of the inventory cycle are expected to have weighed on output with the consumer not yet ready to take the torch of spending. Signs that the weak labor market is having a greater toll on the economy would sink U.S. interest rate expectations further and potentially weighing on the dollar. However, an ensuing flight to safety could derail the Australian dollar and sinking the pair.

Data for July 28– August 1

Data for July 28– August 1

Date

Australia Economic Data

Date

U.S. Economic Data

July 28

Consumer Price Index (2Q)

July 28

Durable Goods Orders (JUN)

July 29

HIA New Home Sales (JUN)

July 28

Fed Beige Book

July 30

Private Sector Credit (JUN)

July 29

Initial Jobless Claims

Aug 1

AiG Perf of Manufacturing (JUL)

July 30

GDP (2Q A)

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.