While it is too soon to make a
definite call, there are indications that the Aussie dollar against the US
dollar (AUDUSD) might be starting to make a turn from a rising trend to a
falling one. All concerned parties, most notably the Reserve Bank of Australia
(RBA), are now depending on US dollar strength to be the mechanism for causing
a fall in the Australian unit.
While Aussie authorities would prefer
a lower currency they are not keen to take positive action themselves, such as
lowering interest rates, in order to achieve it. Therefore they seem to have
been depending on a strengthening of the greenback. But now the Sydney
Morning Herald has reported a Goldman Sachs analyst as saying that the Aussie
central bank may succumb to the pressure to cut rates before the end of this
year in order to get the desired result.
Technically, the AUDUSD pair has now
established a lower high on the daily chart (arrowed above), and is reaching
for the 200 Day Exponential Moving Average, to the downside. A sustained move
below this would be significant.
FOMC:
“As you were” but USD now positive
Yesterday’s FOMC monetary policy statement, while not
telling us anything new at all, also did not change the long term outlook for the US
dollar, which is positive. Separately, US GDP figures were stellar, coming in at an
annual rate of 4% as against 3% expected, and adding to the positivity.
However, these are subject to revision. The ADP jobs report was inconclusive,
coming in a bit below expectations but on the back of an historical uncertainty
as to its accuracy in predicting the Non-Farm Payrolls number, which is the
only one that counts as far as the Fed is concerned. This comes out tomorrow,
Friday.
US bond yields are still in an upward
trajectory. The Yen, or USDJPY pair, while remaining in a sideways range, at
least reacted to the news yesterday by moving to the top of that range. This
pair is traditionally sensitive to US bond yields and the move up has to be
another early indicator of US dollar prospects, longer term.
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