Market News & Analysis

Top Story

AUDUSD to join the risk rally?

Regular readers will have noticed that we frequently rely on Intermarket Analysis to unravel the jigsaw puzzle of interconnected markets. Looking back over the past 18 months, it can be observed several key markets put in place medium term highs at the end of 2017, start of 2018, before a volatile 12 months ensured.

Some of the markets that peaked at that time which include the S&P 500, the Nikkei, the ASX 200 have since recovered all lost ground and made new highs. A handful such as the Shanghai composite, the DAX, Gold and even Bitcoin, have enjoyed strong rallies during 2019 although remain below the peaks of late 2017, early 2018.

One risk market that has defied this trend is the AUDUSD, which remains near to lows trading in a holding pattern between .7000c and .7200c. In recent months, it has denied the expectations of those looking for a move into the highs 60’s, as the weight of falling home prices and indebted households, have led to calls for the RBA to cut interest rates.

Likewise, the AUDUSD has ignored those calling for a rally due to the Federal Reserve dovish back flip in January, combined with an anticipated end to the U.S. – China trade war. More recently, it shrugged off the stronger than expected Chinese manufacturing data in April, which prompted further gains in the Shanghai Composite, iron ore and the ASX200. Not to mention, better than expected domestic data this month including a bounce in retail sales and housing finance data.

My view is that break is looming and when it does the AUDUSD will follow the lead provided by the bounce viewed in other risk markets. To clarify, a break above downtrend resistance and recent highs .7140/50 would be an initial indication a deeper rebound has commenced and cause to consider long AUDUSD trades. A daily close above the 200-day moving average at .720, would be further confirmation that a move towards .7400c is underway.

AUDUSD to join the risk rally

Source Tradingview. The figures stated are as of the 9th of April 2019. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Disclaimer

TECH-FX TRADING PTY LTD (ACN 617 797 645) is an Authorised Representative (001255203) of JB Alpha Ltd (ABN 76 131 376 415) which holds an Australian Financial Services Licence (AFSL no. 327075)

Trading foreign exchange, futures and CFDs on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, futures or CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange, futures and CFD trading, and seek advice from an independent financial advisor if you have any doubts. It is important to note that past performance is not a reliable indicator of future performance.

Any advice provided is general advice only. It is important to note that:

  • The advice has been prepared without taking into account the client’s objectives, financial situation or needs.
  • The client should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation or needs, before following the advice.
  • If the advice relates to the acquisition or possible acquisition of a particular financial product, the client should obtain a copy of, and consider, the PDS for that product before making any decision.

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.