AUD/USD: has eroded the 0.7240 2018 channel, eyes now to 0.7474 9th July high
- AUD/USD has been in a sideways drift throughout the US session as the US stock markets continue to recover from the recent rout now that the US midterms are out of the way with no great shakes and outcomes as expected.
- AUD/USD is currently trading at 0.7276 from a high of 0.73 the figure and a low of 0.7212.
AUD/USD has rallied from 0.72 the figure and the heels of the Kiwi that came out with some very impressive jobs data yesterday. The dollar was also on the backfoot as the results of the US elections were trickling through all night which had the Dem's take the House, as wildly expected, which now makes life a little more cumbersome to push the Trump agenda through Congress.
Senior Economist, Bill Diviney, at ABN Amro, however, argues that the outcome now paves the way for the growth slowdown:
"With growth momentum slowing as 2019 progresses, and leading indicators next year likely to suggest a further slowing in 2020, we expect the Fed to pause in its rate hike cycle after June."
Such a view has been taken up by the markets of late which has enabled the antipodes and EM-FX to come up for a big gulp of air in recent trading sessions after AUD shorts had been increasing to their greatest level since March 2015 over the concerns about Chinese growth and a slower domestic property market that had been contributing to a cautious central bank outlook. However, the tides have gone out on this one, but maybe only temporarily considering there has been no progress on trade so far and the Chinese economy is not showing any signs of recovery, so far. It is worth noting that AUD/NZD is making further ground to the downside which is telling - The cross has fallen below the 200-week moving average at 1.0762 for the first time in four months.
AUD/USD levels
Analysts at Commerzbank noted that AUD/USD has eroded the 0.7240 2018 channel with closes above it which the analysts said would be required to negate downside pressure and trigger a move to the 0.7474 9th July high on the way to the 200-day ma at 0.7474:
"Dips lower will find initial support at the 55 day ma at .7174 and the market will stay immediately bid above here."
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
