It is quite possible that the Australian Dollar may resume falling in the nearest future. This might be true for both short and long-term, on the basis of the fundamental background. At the same time, the mid-term period, from a week to a month, looks very vague.
During the RBA meeting at the beginning of October, the regulator paid special attention to the Australian Dollar rate. It happens sometimes: the RBA authorities think that any strengthening of the national currency frustrates their efforts to boost the country’s economy. In some way, they are right, because the RBA doesn’t believe in an aggressive approach to its monetary policy and most of the time allows the economy to be regulated and controlled by itself. And sometimes the burst of the currency activity may really interfere.
This time, investors’ response to such comments was quite visible – they started selling the AUD/USD pair. The comments once again made investors doubt the Aussie’s stability in the future: when the Federal Reserve starts selling assets on its balance sheet, the US Department of the Treasury will launch the national debt increase program and the US Dollar will get stronger. It means that the Aussie may get under significant fundamental pressure in the middle of autumn regardless what the technical indicators show.
Not only its own statistics counts against the Aussie. The Chinese statistics matters as well, and the worse reports from China are, the more influence they have on the Australian currency. For instance, the latest reading of the Caixin/Markit Services PMI, which showed that the indicator decreased from 52.7 points in August to 50.6 points in September, although it was expected to expand up to 53.1 points.
The Services PMI is growing, but slower than before. The components of the report show that both new orders and employment rose at a slower pace. The statistics aren’t likely to have a great impact on the Chinese GDP in the third quarter but may provide a lot of causes for doubts and further analysis.
The technical picture of the AUD/USD pair is looking quite logical and balanced. After reversing, the instrument started falling slowly and reaching new lows. However, at the moment the price is trading close to the support level of the descending channel. One of the possible scenarios implies that the pair may be rebound from this level and start growing towards the resistance one at 0.7875. after breaking it, the instrument may continue rising to reach 0.8040.
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Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.