As mentioned in last week’s review AUD poorly performed against almost all its major counterparts, in fact the gain in the AUSTRALIAN 10 Y bond was out weighted by the gain in the US 10 Y t-Note yield. The comdoll was less attractive to investors.
This week I will maintain my bearish bias on Aussie
Will Aussie continue losing ground?
Surprisingly, the week started on the green for the currency, with Trump and the Chinese President promising fair trade between their 2 countries, easing the fear that Australia’s economy would adversely be impacted by a trade war between China and the USA.
Consequently, AUD gained some ground against EURO,GBP,JPY,CHF,CAD and NZD but struggled against the greenbucks which continued to rise.
Correction of last week’s drops or a change of trend? How AUD performs will depends on important datas yet to be released this week:
RBA minute of monetary policy, investors will be given insight into how officials view the Economy and what policies will be implemented. The interest rate should remain unchanged till next year.
Wages Price index (YoY) Q3 expected 2.0%
Wages Price index (QoQ) Q3 expected 0.5%
WPI provides a summary and analysis of changes in the price of wages and salaries in the Australian labour market unaffected by changes in the quality or quantity of work performed.
A positive reading would be positive for Aussie.
Employment change expected 20.0k
Unemployment Rate expected 5.6%
In October Labour datas took over Inflation as drive of monetary policy. Positive reading should be expected as interest rate is expected to remain the same.
Now let look at some CROSS CURRENCIES: (note please refer to below charts for technical analysis)
Surprisingly the market quickly came to term with Trump’s victory and his promised loose fiscal policy (tax cuts and raise in government spending) is not anymore perceived as a threat to the Economy but an important stimulant which will lead to growth and inflation, and ultimately allow the Fed to raise interest rate in December as projected.
Therefore I expect AUD to continue weakening against USD.
Important US News to look for this week
Retail sales and CPI
Fed chair J. Yellen testimony on Thursday.
Yen lost ground with the return of Risk appetite to the market, Despite a stronger than expected GDP on Monday, currency is been trading the lowest and I expect it to carry on like that until next Risk off returns.Being a bear on aussie i will scalp retracements.
There is no other important JPY news release scheduled this week
Sterling has been strong for the past 2 weeks due to a gain in UK 10 Y Gilt yield (government bond) ,a decrease in investors fear about a potential “Hard Brexit”, higher inflation forecast and more importantly BOE governor M. Carney confidence in the Economy.
i will scalp long opportunities on the pair.