The Aussie Dollar has been a roller coaster ride of late with events around the world dictating short term moves in the currency.
It has been widely publicised that Australia is the only major economy to have avoided a recession during the current financial crisis and economic growth rebounded strongly in the second quarter of the year with growth of 1.2%, which totally erased the 0.9% drop in Q1.
The Reserve Bank of Australia left rates on hold again this month, warning that uncertainty in Europe and the US risked damaging business and investor sentiment in Australia.
Despite the decent growth data there are real risks that Australia is becoming a “2 speed economy” with the mining sector booming whilst consumer demand remains slack. RBA Governor Stevens has stated that “Australia faces a very unusual and powerful set of complex forces” and that economic growth had been “Uneven and patchy”. In fact the usually resilient jobless rate rose to 5.3% in August and there have also been declines in consumer and business sentiment which have led to calls for interest rate cuts from the level of 4.75% currently. The minutes of this month’s rate setting meeting on 20th September will be closely watched.
TIPS FOR AUD BUYERS
The long term chart is still in a long term downtrend. The MACD is just below the zero line meaning that we are still trending lower and the recovery from the 1.4760 all time low last seen in August has been limp at best. Buyers should target 1.5500 which is the 50% Fibonacci retracement level form the recent move from 1.5965 to 1.4990. A break below 1.5000 would be worrying and S/l should be placed below here as a test of the all time lows may be on the cards
TIPS FOR AUD SELLERS
Aud sellers are in a fortunate position of seeing the best exchange rates in a generation and may well be wise to cover a portion of their exposure at current levels. Only a break and a close above 1.6000 would suggest a change in sentiment.
Thank you to Halo Financial who contributed towards this articleTags: AUD business sentiment caption consumer gbp exchange rate interest rate cuts investor sentiment time lows TIPS