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
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
GBP/USD
Bearish
USD/JPY
Bullish
Gold
Mixed
Oil - US Crude
Bullish
Bitcoin
Mixed
More View more
Real Time News
  • RT @JMahony_IG: 2019 vs 2017. Incredible to see the decimation of Labour votes in their traditional heartlands. https://t.co/jEDc3aNNkV
  • #DidYouKnow a #Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/c51s3IBcEu https://t.co/Ha25p32Ax2
  • 🇬🇧 GBP BoE/TNS Inflation Next 12 Mths (NOV), Actual: 3.1% Expected: N/A Previous: 3.3% https://www.dailyfx.com/economic-calendar#2019-12-13
  • Join @PaulRobinsonFX 's #webinar at 5:30 AM ET/10:30 AM GMT as he goes over London #FX & #CFD charts for the next week. Register here: https://t.co/CoMkMA0pdF https://t.co/vvSaRzqnyk
  • USD/CHF IG Client Sentiment: Our data shows traders are now at their most net-long USD/CHF since Jun 26 when USD/CHF traded near 0.98. A contrarian view of crowd sentiment points to USD/CHF weakness. https://www.dailyfx.com/sentiment https://t.co/luvd6aOalw
  • FTSE 100 +1.69% @ 7409 FTSE 250 +4.43% @ 21710 #ftse #equities @DailyFXTeam
  • Heads Up:🇬🇧 GBP BoE/TNS Inflation Next 12 Mths (NOV) due at 09:30 GMT (15min), Actual: N/A Expected: N/A Previous: 3.3% https://www.dailyfx.com/economic-calendar#2019-12-13
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.79%, while traders in France 40 are at opposite extremes with 78.81%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/JT9th5spHe
  • Commodities Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.67% Gold: 0.04% Silver: 0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/sxMNqr5Al2
  • - European and US stock markets may have strong start to trading day - US-China trade war progress, UK election helping to buoy sentiment - Retail sales data from US may amplify volatility, uplift market mood https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2019/12/13/Euro-Stoxx-50-May-Rally-on-UK-Election-Retail-Sales-Data.html
Reeling Australian Dollar Faces Fundamental, Technical Headwinds

Reeling Australian Dollar Faces Fundamental, Technical Headwinds

2018-08-23 02:37:00
David Cottle, Analyst
Share:

New DailyFX Quarterly Forecasts for Q3 and are available here

The Australian Dollar faces considerable fundamental headwinds which are likely to worsen in the days ahead.

Thursday’s vote on an adjournment of the Australian Parliament underlines its political leadership crisis at a time when the Kansas City Federal Reserve’s annual monetary heavyweight symposium at Jackson Hole, Wyoming is likely to see the US central banks’ commitment to higher interest rates for as long as the economics make them plausible underlined.

This will only deepen the already unmissable contrast with the Reserve Bank of Australia. It may well insist that the next move for record low Aussie interest rates, when it comes, will be an increase. But the markets do not now see such a thing coming for all of next year, at least, with inflation stubbornly low and consumer debt equally stubbornly high. With the growth cycle already elderly around the world, we could see Aussie rates on hold for a very long time to come.

The fundamentally bearish points are now allied to the latest AUD/USD bull run’s failure to reach, never mind top, the 0.7427 level which would have allowed the bulls an opportunity to consolidate their gains from a position of strength.

Reeling Australian Dollar Faces Fundamental, Technical Headwinds

Focus is now squarely to the downside, with the most recent significant low likely to give way if approached. That comes in at 0.7238 where the pair bounced last week. It is also the lowest point seen since January, 2017.

Should that, too give way, and it all-too-easily could, then focus will inevitably be on new lows in the 0.7030 area, last seen in late 2015.

It would appear that such falls are all too likely now. However, a more dovish than expected performance from Federal Reserve Chair Jerome Powell at Jackson Hole could buy AUD/USD bulls some time, even it it won’t dispel the genuine fundamental question marks over the Aussie. It’s probably also worth keeping an eye on the Australian stock market which, for all the global uncertainties over trade, remains comfortable close to record highs and could be a source of continued Aussie buying.

Stop loss-buy orders around August 21’s peak of 0.7377 might offer good protection against a knee jerk bounce based on this eventuality. The New Zealand Dollar could face similar fundamental and technical weakness but is arguably in a better place than the Aussie on comparisons of the two currencies’ home economies. Buying NZD/AUD modestly at market could also make sense.

Resources for Traders

--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

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

DISCLOSURES

News & Analysis at your fingertips.