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
Oil - US Crude
More View more
Real Time News
  • Commodities Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Gold: 0.56% Silver: 0.39% Oil - US Crude: 0.12% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/nGk6siLuAj
  • #Gold prices have responded to key support with the recent recovery now targeting the first resistance target at 1472- look for a reaction here. Get your $XAUUSD technical analysis from @MBForex here: https://t.co/DOaEk7zMub https://t.co/psZR1kviqk
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.57%, while traders in France 40 are at opposite extremes with 84.14%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/MicO4pBhXR
  • Banxico: - Core inflation running persistently high $MXN
  • $USDJPY drops as Financial Times reports that China continues to delay truce with US in struggle to close phase-one trade deal https://t.co/Nm2LnUSyRx
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: France 40: 0.01% Germany 30: -0.10% US 500: -0.14% Wall Street: -0.20% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/MLZRHQnmWc
  • Fed's Bullard: - Review of policy is evolution, not revolution $DXY $SPX
  • RT @Scutty: Global Debt Surges Above $250 Trillion as U.S., China Lead Way https://t.co/Lgr5sUSGQx
  • RT @LiveSquawk: Fed's Bullard: Fed Can Reconsider Whether To "Take Back" Recent Insurance Cuts If And When Businesses Adjust To New Trade L…
  • Fed's Bullard: - Baseline case for 2% growth is holding $SPX $DXY
AUD/USD Breakout Unravels as China Responds to Trump Tweet

AUD/USD Breakout Unravels as China Responds to Trump Tweet

2019-10-16 00:00:00
David Song, Currency Strategist

Australian Dollar Talking Points

The recent breakout in AUD/USD unravels amid doubts surrounding the US-China trade negotiations, and the exchange rate may continue to give back the advance from the start of the month as it carves a fresh series of lower highs and lows.

AUD/USD Breakout Unravels as China Responds to Trump Tweet

AUD/USD continues to pullback from the monthly-high (0.6811) as China’s Foreign Ministry spokesperson,Geng Shuang, provides further details regarding “phase one” of the trade deal and states “Chinese companies independently purchased US agricultural products following market principles and based on domestic demand.”

The comments undermine a recent tweet by President Donald Trump as the Commander in Chief insists that China “will immediately start buying very large quantities of our agricultural product, not wait until the deal is signed over the next 3 or 4 weeks.

Image of IMF global growth forecast

It remains to be seen if the trade negotiation will bear fruit as Chinese officials pledge to retaliate to the US blacklist, and the Australian Dollar may face headwinds ahead of the Asia-Pacific Economic Cooperation (APEC) meetingscheduled for November 15-16 as the International Monetary Fund (IMF) continues to cut its global growth forecast, with China, Australia’s largest trading partner, now projected to grow 6.1% in 2019.

Image of DailyFX economic calendar

Nevertheless, the Reserve Bank of Australia (RBA) may move the sidelines at the next meeting on November 5 after reducing the official cash rate to a fresh record-low in October, and the central bank may revert to a wait-and-see approach as updates to Australia’s Employment report is expected to show the economy adding 15.0K jobs in September.

However, the RBA Minutes suggest the central bank will retain a dovish forward guidance for monetary policy as “the Bank's most recent forecasts suggested that the unemployment and inflation outcomes over the following couple of years were likely to be short of the Bank's goals.

In turn, the RBA may retain its pledge “to ease monetary policy further if needed,” and AUD/USD may continue to track the downward trend carried over from 2018 as the central bank keeps the door open to further embark on its rate easing cycle.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

AUD/USD Rate Daily Chart

Image of AUD/USD daily chart

Source: Trading View

  • Keep in mind, the AUD/USD rebound following the currency market flash-crash has been capped by the 200-Day SMA (0.6973), with the exchange rate marking another failed attempt to break/close above the moving average in July.
  • More recently, AUD/USD has taken out the September-low (0.6688) as it continues to track the downward trend carried over from late last year, with the Relative Strength Index (RSI) offering a bearish signal as the oscillator snaps the bullish formation from August.
  • The lack of momentum to close above the 0.6800 (61.8% expansion) handle brings the Fibonacci overlap around 0.6720 (78.6% expansion) to 0.6740 (38.2% expansion) back on the radar, with the monthly range in focus as the exchange rate carves a fresh series of lower highs and lows.
  • With that said, AUD/USD may make a run at the yearly-low (0.6671), but need a close below 0.6690 (50% expansion) to open up the next downside hurdle around 0.6620 (100% expansion) to 0.6640 (61.8% expansion).

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

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


News & Analysis at your fingertips.