AUD,NZD/FXWW News/Trade Ideas

AUD/USD: Looking oversold again and most recent selling is speculator driven

Compared to the rest of the globe, the fundamental picture in Australia is relatively sound. We’ve seen the currency undergo a sharp re-alignment in recent months driven by asset repatriation, but the more recent moves are speculator driven (the same guys who were long at 1.05!).

I’m not being dragged into the eternal AUD bear story, which I think is a load of cobblers, and once the charts stabilise we dip-buyers will get another chance. Have a look at the weeklies (see chart) which suggest that we could see levels towards .88/.89 and I think I’m best saving my ammunition for that dip.

  1. Also released today was Australia’s Balance of trade showing a surplus! (So much for a high currency encouraging imports). At around A$670 million it is an underlying bullish fundamental – representing, as it does, a deficit on the capital account absorbing at least some of that repatriation selling.

  2. Thanks James, sorry bit slack today, kids on school hols and we’re on move. Btw, will have to move back our get-together by 1 week to July 25th, will send you an email

  3. Hey Sean , back on the counter trend boat with a few points. Current levels are within the area of 62% retracement of the last weekly advance 0.8060 – 1.10 , which stands at .9180. Point is that a retracement bigger of a weekly up trend of such magnitude happened during GFC when it retraced 76.4% of the advance since .50 in 2001 to .98 in 2008. Right now the price is consistent with a downtrend , making new lower lows , but if these levels are sustained on a weekly basis ( there’s that US employment thingy ) then i would look for a retracement to 76.4 which is around .8750. Now i just know that I’m not the sharpest stick when it comes to fundamental valuations , but to dump the currency that hard like in 2008 would mean that the situation is that bad. And since we’re not in a GFC again and the issue is less of safety and more of yield , if they’re pulling money out of Australia they have alternatives for yield right ? Price action for the rest of the week remains of major importance.

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