HFM information and reviews
HFM
96%
Octa information and reviews
Octa
94%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%

Currency Point: All priced in for the AUD


25 October 2019

Over the past 4 months, the AUD has consistently been at the bottom end of the G10 currencies. This slide has been driven by the market racing to pricing the next wave in the RBA’s easing cycle. 

The sell-off has been justified as 3 cuts in 5 months and a spread between the US and Australian 10-year bonds falling to levels not seen since 1980 has pushed the AUD to its lowest level in a decade. 

However, several factors are starting to support the AUD, and these are likely to bring short term trade opportunities. 

First: is the RBA’s easing cycle is now at its back end? Even if it was to cut rates again in November to make it 4 cuts in 6 months it will likely have to be an oxymoron as the Board will likely have hawkish language attached. 

Governor Lowe and Co. are acutely aware of the risk of hitting ‘zero’ and thus increasing the prospect of negative rates and quantitative easing. This may still happen in late 2020 early 2021 but is far enough away from this trade set up and one that in my view is growing less and less likely.

The second reason is the fact labour markets are improving. This has led to a slide in bets November is a live meeting seeing the chance of a cut falling from above 50% to 43%. If next week’s Q3 CPI data is in line with estimates at 1.5% year-on-year (YoY) or even holds the line with Q2 at 1.6% YoY November is likely to be off and the AUD will likely take off.

Finally, trade momentum is on the up once more. Australia’s trade balance has continued to expand, and the low AUD has been a boon for Australia’s trade value returns. This has been filling the void left by consumption in its GDP figures. 

Furthermore, with the US-China trade tensions beginning to move into ‘deal’ territory having seen several sign deals being agreed upon in the past 2 weeks; the AUD’s quasi-China setup will benefit from any further signs Washington and Beijing are resolving their differences. 

Over the same period the AUD has fallen the JPY has risen strongly. The current position of the AUD and the JPY suggest this is an opportune time to look at this cross for a long call.

The reasoning for the AUD is mentioned above but supporting using this cross is negatives on the JPY side of the trade. The rise in the global bond yield over the past month should allow the Bank of Japan to purchase more JGBs which will put more JPY liquidity back into the market a JPY negative on global market which should further enhance a long AUDJPY trade.

Trade caveats: RBA’s dovishness ramps up, US equity markets fall on poor earnings, the US-China trade tensions revert to August/September levels. 

Share: Tweet this or Share on Facebook


Related

What will happen to the gold price in 2024: Octa forecast
What will happen to the gold price in 2024: Octa forecast

According to many analysts' forecasts, the price of gold may increase in 2024. Octa explains in the article what factors will influence the dynamics of the gold price and what will happen to the market this year.

8 Mar 2024

EUR/USD Shows Strength Amid Anticipation of Key Events
EUR/USD Shows Strength Amid Anticipation of Key Events

The EUR/USD pair is exhibiting resilience, navigating around the 1.0850 mark on Tuesday, following a sequence of rises in the previous two sessions.

5 Mar 2024

Dollar stays on the backfoot ahead of key data, yen enjoys CPI lift
Dollar stays on the backfoot ahead of key data, yen enjoys CPI lift

Traders await some key data releases, RBNZ decision amid quiet start to the week. Yen broadly firmer after CPI beat, adds to dollar weakness as euro extends gains. Equity rally loses some steam but Bitcoin surges.

27 Feb 2024

Bitcoin and Ether in area of light resistance
Bitcoin and Ether in area of light resistance

The crypto market capitalisation reached $1.99 trillion, according to CoinMarketCap estimates, an increase of over 10% in one week. Forbes estimates that the $2 trillion mark was reached last week.

19 Feb 2024

Crypto Market Takes a Breather Amidst the Storm: A Detailed Analysis
Crypto Market Takes a Breather Amidst the Storm: A Detailed Analysis

The Crypto Market Displays Stability with Bitcoin Around $40K: In the midst of the ever-volatile cryptocurrency landscape, the last 24 hours have provided a moment of respite as the market capitalization hovers...

25 Jan 2024

WTI Crude Futures Eye Critical 61.8% Fibonacci Level in Upward Surge
WTI Crude Futures Eye Critical 61.8% Fibonacci Level in Upward Surge

WTI Futures Break Above Key Resistance, Eyeing Fibonacci Milestone: Positive Momentum Indicators Suggest Potential for Further Gains. West Texas Intermediate (WTI) oil futures...

25 Jan 2024


Editors' Picks

The Top Forex Expert Advisors 2024: Performance, Strategy, and Reliability Review

An annual roundup reviewing the most successful Forex Expert Advisors (EAs) based on their performance, strategies employed, reliability, and user feedback. This piece would provide insights into which EAs have been market leaders and why.

The Evolution of Forex Expert Advisors: Navigating the Path of Technological Revolution

The concept of automated trading has been around for decades, but the accessibility and sophistication of Forex EAs have seen significant advancements in the past few years. Initially, automated trading systems were rudimentary, focusing on simple indicators like moving averages.

The Impact of EAs on Forex Trading: A Double-Edged Sword

By enabling continuous, algorithm-based trading, EAs contribute to the efficiency of the Forex market. They can instantly react to market movements and news events, providing liquidity and stabilizing currency prices through their high-volume trading activities.

MultiBank Group information and reviews
MultiBank Group
84%
XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.