Forex Investment and Currency Trading

AUD-USD is still expected to trend higher towards 0.72+
A very slow basing pattern is under way, with 0.6245/0.6010 key support holding
Technically, clients should be small long and add on an upside break of 0.6629

The AUD-USD pullback in early March found support ahead of the critical 0.6245 area, with buyers driving spot above 0.65 again. This is still seen as part of a basing pattern, which is taking time to unfold. On a trend basis, AUD-USD is above the 20-day moving average (MA) at 0.6455, but is below the 60-day MA at 0.6629. A turn above the latter is expected over [...]

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The RBA has intervened on several occasions in recent weeks as AUD/USD threatened to trade below 0.60 raising speculation that 0.60 is the “line in the sand”. Though recent intervention efforts have been successful in halting a decline in AUD/USD through 0.60, an eventual break lower is a key risk on renewed risk aversion. Such a break could extend to 0.55.
The RBA undertakes transactions in foreign exchange markets for several reasons. The least frequent, but most prominent, are those to influence AUD - intervention. This is distinct from the building (or drawing down) of foreign exchange reserves associated with the [...]

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Current sentiment for the A$ is very bearish…
The overall atmospherics remain downbeat for the AUD. As highlighted by the chart across, commodity prices have moved sharply against the currency and we could add the yield spread and domestic data to this picture. However, it must be asked how much of this bad news is already priced in? Since its peak in mid July, the AUD has fallen by close to 35% in its most violent correction since the currency was floated in December 1983. There seem to be lots of other compelling reasons to own AUD here - funding markets [...]

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The AUD has fallen for ‘good’ reasons – a fall in commodity prices and a narrowing in interest rate differentials. Both of these factors are likely to continue to weigh on the AUD as the global recession undermines commodity prices and the RBA cuts interest rates faster than most other central banks.
Support for this view is also derived from the sharp decline in bulk freight shipping rates which have fallen more than 85% from peak levels earlier this year.
That said, the AUD has fallen very sharply from the recent peak of US$0.9849 recorded in July.
As noted above, the AUD fall [...]

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