Australian Dollar: USD/AUD (AUD=X) advances on rivals after China notes trade war “progress”
The Australian Dollar was rose broadly Thursday in response to claims the U.S. and China are moving close toward a deal that will end the “trade war” between the two, which came ahead of retail sales figures for November.
Chinese officials said Thursday that talks with U.S. counterparts have laid “the foundation for resolving issues” around international trade over the coming weeks, delivering a boost to investor risk appetite at a time when markets are on edge over the so-called trade war between the world’s two largest economies.
President Donald Trump is threatening to raise the 10% tariff rate imposed on $250 billion of Chinese exports to the U.S. each year and target its remaining U.S.-bound trade with new levies if a deal addressing “unfair trading practices” is not reached before March 01.
The tariff fight between the two has hurt the Australian Dollar as well as denting economic growth and investor confidence the world over during the last six months, so any signs that a deal could be in the pipeline were always going to be welcomed by the Antipodean currency.
“China’s renminbi at new local highs versus the USD and a strong rally in Asian equities is making it tough for the currency to stay down. Squeeze risk continues if markets remain in positive stance,” says John Hardy, chief currency strategist at Saxo Bank.
All of this matters to the market because Australia’s currency is underwritten by a huge commodity trade with China and the rest of the world, which has led the unit to develop a close correlation with commodities and China’s Renmbimbi.
China’s economy and currency have been pressured lower by the trade war in recent months, accounting for much of the fall in the Aussie, but at a time when the Australian economic outlook appears to be growing darker.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 0.72.
The projected upper bound is: 0.73.
The projected lower bound is: 0.71.
The projected closing price is: 0.72.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 94.8309. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 9 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 56.30. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 13 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 143.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX AUD= closed up 0.001 at 0.718. Volume was 7% below average (neutral) and Bollinger Bands were 4% narrower than normal.
Open High Low Close Volume___
0.717 0.720 0.714 0.718 105,235
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 0.71 0.72 0.73
Volatility: 11 10 10
Volume: 103,743 116,047 107,059
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX AUD= is currently 2.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of AUD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AUD= and have had this outlook for the last 22 periods.