Sinking Australian Dollar Can’t Look For Support In The Numbers

Australian Dollar vs. US Dollar daily draft

Fundamental Australian Dollar Forecast: Bearish

  • AUD/USD continues to sink
  • For as prolonged as rate differentials foster a ‘USD’ side it’s approaching to continue to
  • That could make this week another tough one

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The Australian Dollar will conduct into a new trade week in flattering many a same state it’s been in all year: underneath vigour opposite a large US brother.

AUD/USD has been stranded intentionally in a downtrend given a highs of Jan and a foundations of that downtrend are simply not going to be jarred in a entrance 7 days.

Interest-rate differentials distortion during a heart of them. The US Federal Reserve is good into a routine of lifting a possess rates from their post predicament lows. It declined to take matters serve this month, though is widely approaching to go again in June. The Reserve Bank of Australia by contrariety is not approaching to lift a possess Official Cash Rate from a record, 1.50% low until mid-2019. And it’s already a longest unvaried rate in Australian story carrying been with us given Aug 2016.

Adding to this unashamedly Aussie-bearish backdrop is a clarity that the RBA utterly likes things this way. It still loses no possibility to advise investors that a stronger banking would strike a ability to make a expansion and acceleration targets. When it left rates on reason this month it forked out that AUD/USD stays above ancestral averages.

Australian acceleration stays stubbornly next target. It came in during 1.9% annualized for a initial quarter. That was accurately where it had been during a finish of 2017 and still only next a RBA’s 2-3% aim band.

Away from a interest-rate skirmish, a Australian economy is doing utterly good on some measures. Its trade over-abundance came in really strongly according to a many new information and practice continues to enhance notwithstanding a prolonged run of considerable gains. This week is full of mercantile snapshots, from business and consumer certainty surveys by to sell sales.

The difficulty with all of them from a Aussie-bull’s viewpoint is that they are really doubtful to pierce a dial on interest-rate expectations. Therefore, they are doubtful to boost AUD/USD. So, another bearish call it has to be this week.

Australian Dollar vs. US Dollar daily cost chart

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— Written by David Cottle, DailyFX Research

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