
Our old
friend the Aussie dollar has enjoyed a resurgence this week. The ostensible
reason is the publication of Australian GDP figures that were in line with
expectations and therefore did not disappoint. In addition, the Reserve Bank
(RBA) kept the cash rate on hold at its most recent meeting.
While these
are valid reasons for correcting a fall in the Aussie, they are not sustainable
indications of a reversal in that fall. The mining economy has still peaked,
unemployment is still rising and, despite something of a short squeeze caused
by Chinese steel manufacturers who rashly allowed stocks to fall in
anticipation of cheaper iron ore prices, the overall trend in commodities is also down.
USA
Quantitative Easing (QE) is still on track for tapering and there is a very
significant resistance for AUDUSD at 0.93902.
And we must
not, above all, forget the upcoming Federal elections Down Under. These will
take place this coming weekend. The currency is very sensitive to political
developments and it must be true that there is a degree of positioning taking
place in anticipation of the election.
This chart
shows what happened at the time of the last general election in Australia :
The
horizontal dashed line to the left of the block arrows on the chart represents
the weekend of the election (elections in Australia are always held on a Saturday),
when currency trading does not take place. On the Sunday night, Greenwich Mean
Time (GMT), when the markets in New Zealand reopened, the AUDUSD pair had been
marked down by a full US cent as a reaction to the Aussie election result. Such
as gap, while quite common in equities and indexes, is almost unknown in
Foreign Exchange trading.
We remain
on the sidelines in this pair at present.
Australian dollar is in high demand, especially as they think Australian interest rates are on the way up.Cheers
ReplyDeleteOnly time will tell - when the dust settles after the election. Thanks again / SMcK
ReplyDeleteExactly Australian dollar is high in demand..
ReplyDeleteFeels Great.. now let see what would happen in forex trading..
ReplyDelete