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Great attention for the Australian Dollar falling below parity against the U.S. dollar, an event that has not happened since December 2011, but above all an event that shows the cross below the average at 100 weeks, twice tested in 2010 and 2011 and always ready to push the change upward.
Over the last 5 years, this moving average has been very useful to catch the market bottom, and just in one case (2008) gave a crash. As we can see, the behavior of hedge funds on the futures market is also similar to the previous cases. The net long balances and the long rate on the open interest have reached levels similar to those stated above; even in this case, the exception was in 2008 when the hedge funds moved from the net short side, very unusual for the Australian Dollar in recent years.
Till now, we would not have concrete evidences to determine how likely the Aussie can restart or fall even lower. But there is an interesting link to the DJUBS Industrial Metals index. As we can see from the graph below, this index tends to anticipate the weakness of the AUD, with maximum in AUD/USD that are not confirmed by maximum in the metals. It has happened before the collapse of 2008 and unfortunately it is happening even now, and the situation might worsen soon, as the average at 50 weeks of industrial metals has cut that down the one at 100 weeks... just like in 2008. Therefore, we think that entering on the AUD/USD might be too risky, even considering a possible further fall until 0.93 (chart source: Bloomberg).
Over the last 5 years, this moving average has been very useful to catch the market bottom, and just in one case (2008) gave a crash. As we can see, the behavior of hedge funds on the futures market is also similar to the previous cases. The net long balances and the long rate on the open interest have reached levels similar to those stated above; even in this case, the exception was in 2008 when the hedge funds moved from the net short side, very unusual for the Australian Dollar in recent years.
Till now, we would not have concrete evidences to determine how likely the Aussie can restart or fall even lower. But there is an interesting link to the DJUBS Industrial Metals index. As we can see from the graph below, this index tends to anticipate the weakness of the AUD, with maximum in AUD/USD that are not confirmed by maximum in the metals. It has happened before the collapse of 2008 and unfortunately it is happening even now, and the situation might worsen soon, as the average at 50 weeks of industrial metals has cut that down the one at 100 weeks... just like in 2008. Therefore, we think that entering on the AUD/USD might be too risky, even considering a possible further fall until 0.93 (chart source: Bloomberg).
