With the USD Index back above 95.05/10 Basis Point
From the AUDUSD consolidation period, it took a month / half for the AUSSIE to slide back towards 7180, as described on the chart below & based on the market & price level last July 19th. Obviously the exchange rates are misaligned at this time and the forex market takes a much longer period of time to make a decent market move on our price parameters. The relative mix price action among the major components of the USD index is in a misalignment compared to the right levels of which each pair should have moved based simply on their respective standard deviation. Following the sequence of market trade analysis describe below
From the AUDUSD consolidation period, it took a month / half for the AUSSIE to slide back towards 7180, as described on the chart below & based on the market & price level last July 19th. Obviously the exchange rates are misaligned at this time and the forex market takes a much longer period of time to make a decent market move on our price parameters. The relative mix price action among the major components of the USD index is in a misalignment compared to the right levels of which each pair should have moved based simply on their respective standard deviation. Following the sequence of market trade analysis describe below
After the consolidation period, the August 09th decline followed by a volatile price swing in both directions, the Aussie have finally set its objective right on the money at 0.7180. The next direction would really depend on both the USD and China relative performance as market drivers as a major trading partner of Australia.
While other traders are doing day trades for a few pips here and there. That's alright, though the risk gets wider especially when the USD index or DXY stalls on the decline which only reached a low at 94.16 for the month of August. And closed Friday in the US session at 95.09 on a daily relief recovery. Not quite encouraging yet still well within its average range levels which it sustains for now.
One significant & relatively anticipated decline would come from another USD rally as it enters the month of September where the FEDERAL Reserve would pull the trigger for another rate hike and another in the month of December. Investors / traders alike who are well positioned with the USD is more appropriate until now from the time that we called it on 'STRATEGIES .USD Probable Turn in the Making'. That was indeed an excellent run from the low at 88.25 to the high at 96.98. Which in fact was transitioning into corrective mode when it reached its 50% FIBO resistance level that resulted to the August month's low at 94.16
On Aussie / USD Reports the week ahead
ReplyDeleteMarket s would be focused on RBA Governor Philip Lowe statements after the RBA Rate decision. And additional reports coming from USD ISM manufacturing & employment data, including changes in Non-Farm payrolls & Unemployment rate figures.
As of now, Australia’s high consumer debt would limit an active response from policy makers; as higher rates would not improve debt repayments and would likely be a carry on burden tantamount in the reduction of consumer spending and a rise in payment defaults will follow through as a repercussion
of any sudden policy changes.