Welcome to another day of forex trading my friends! My pick for the day is the Australian dollar versus the US dollar currency pair (AUD/USD) or the “Aussie” as many would call it. As you can see, [Read more...]
Bullish Setup In The Aussie Dollar (AUD/USD)!
The Aussie (AUD/USD) Setup In The 1-Hour Chart
Hello traders! My forex pick for the day is the [Read more...]
The Australian Dollar At A New All-time High!
The holiday season must have really great for those who are long on the Australian. The month of November was not particularly well since the AUDUSD pair has slid by 640 pips after marking a historical high at 1.0183 and [Read more...]
Bullishness Seen In The Aussie!
Hello guys! Welcome to another day of forex trading. My forex pick for the day is an update on the Australian dollar against the US dollar currency pair (AUDUSD) or as some may call it “Aussie”. During my last post on this (kindly check here), I mentioned it could head north once again after a possible rebound from its 7-month trend line seen in the daily chart. Gladly, as the AUDUSD touched the trend, [Read more...]
The Aussie Could Head North Once Again
Hey guys, here’s my technical analysis update on the Australian dollar against the US dollar (AUD/USD) or the “Aussie” as some people call it. The Australian and US dollar were at par last month (kindly check this) then an all-time high of 1.0183 was made on November 5. However, the Aussie started declining by a thousand pips to an 8-week low of 0.9584 because of the Ireland banking crisis then followed up by the potential North-South Korea war last week. Fortunately for [Read more...]
The Aussie is Finally at Par With the US Dollar!
The Australian dollar is finally at par with the greenback! Just today, the AUDUSD pair touched and even moved above the magical 1.0000 number after breaking out from a symmetrical triangle. Back in October 4, I asked whether the AUDUSD had the legs to reach for the parity level (kindly see it here). At that time, the pair had just broken out from a rare broadening right triangle formation. The pair then continued to move north before moving sideways for almost two weeks. The inevitable occurred and luckily for the Aussie bulls, the pair broke out to the upside. At present, the Aussie is now trading at just above 1.0000, it’s first time in history to be at that level. And based on my technical estimate (gauged by projecting the height of the smaller triangle upward), it could at least reach 1.0150. A more promising target would be as high as 1.0700 which is measured based on the height of the larger broadening pattern.
Earlier today, the Reserve Bank of Australia (RBA) surprisingly hiked its interest rate to 4.75% from 4.50% which effectively pushed the Aussie towards uncharted territory against the US dollar. The central bank sees inflation to rise at a faster pace over the medium term. One tool to prevent a rapid rise in prices is of course to increase the market’s interest rates. The increase makes the Aussie more appealing to investors because of its higher yields compared to the meager 0.25% of the greenback. More robust Australian economy, higher RBA interest rates, talks of additional QE measures by the Fed, plus the overall negative sentiment on the dollar have been working well for the AUDUSD, making it the best candidate for carry trade as of the moment. If these factors remain then the demand for the pair would more likely increase as well.
Aussie Poised to Make Another Run Against the Loonie
Welcome to another week of FX trading! Contrary to my post last October 5 (kindly see it here), the AUDCAD did not encounter any resistance at its previous high at 0.9200. Instead, it broke right above it to form an ascending triangle pattern. In such pattern, buyers are deemed to be the more aggressive than the sellers. Here, buyers continue to buy the Australian dollar despite the increase in its price while the sellers only sell it at a specific price level. Therefore, a break out to the upside is more likely. If it does, it could spring by another 200 pips or so to even surpass the AUDCAD-parity marker (1.0000). The pair’s present uptrend is also suggesting the probability of a move higher. But in case the 1.0000 level proved to be tough to break through and the pair breaks down from the triangle, the previous high at 0.9900 and the uptrend line should provide some support.
On the fundamental side, remember that Australia was one of the very few major economies that escaped a recession. It’s central bank, the Reserve Bank of Australia (RBA), was also the first to raise its interest rates, making 2009 the year of the Aussie. The first quarter of this year, however, belonged to Canada when it posted improvements in its consumption and labor market. And as a result, the Loonie took the driver seat against as the most favored currency at least at that time away from the AUD. The gains, though, in both economies are starting to abate. So between the two, who should the market favor?
You see, Australia has China to back its economy. In case you do not know, Australia is one of China’s major suppliers of raw materials. I would like to mention as well that one of these input materials happens to be gold which is now trading at an all time high. So with China’s economy expanding by 10.3% during the second quarter and is seen to have grown again by another 9.3% during the third, Australia’s export industry at the very least should not have any problem. Now juxtapose this with Canada and the US. It’s been in the news for more than a week now that the Fed is planning to flood the market with more dollars in order to bring down the market interest rate to encourage more lending and spending, thus, stimulating business activity. This only means that the present business condition in the US are very much anemic. Such would of course negatively affect Canada since the US its major trading partner. In other words, poor business condition in the US would also mean the same for Canada.
Aside from the impact of Canada’s and Australia’s major trading partners in their respective economy, the currencies’ interest rates also play a big part why I’m more bullish on the Aussie than the Loonie. The Aussie has a 4.5% interest rate while the Loonie only has 1.00%. This means that if one goes long on the AUDCAD, he could also net 3.5% in interest rate differential as a bonus aside from the potential to have capital gains.
New Historical High For the Aussie. Next, US Dollar Parity!
Good day to you my Forex friends! Guess what?!?! The Australian dollar has recently marked a new historical high over the US dollar. And from the looks of it, it seems that the AUDUSD pair has still a lot of legs left to move higher. As you can see from its 8-hour chart, the pair has been trading on a well defined uptrend for quite some time now. Earlier this week, the pair opened with a bullish gap though this move was invalidated when it fell below the bottom of the gap. Nonetheless, the tide has even turned for the better now as it formed and then broke out from an ascending triangle formation after moving past its previous all-time high at 0.9849. Gauging from the height of the pattern, the pair could run upwards by at least 150 pips more from 0.9900, bringing the 1.0000 marker in sight. As long as the uptrend holds, the Australian dollar would most likely reach parity with the greenback in the near term.
Recent talks of more money printing scheme (quantitative easing) by the US Federal Reserve has reflected negatively on the USD. Fed Chairman Ben Bernanke earlier stated the possibility of another round of quantitative easing or the printing of more money in layman’s term to support the economy by encouraging the public to borrow and to spend. Aiming to reduce the daily market lending rate by increasing the money supply would of course lessen the dollar’s valuation.
Based on the latest survey, retail sales and inflation figures in the US are expected to remain subdued. If these numbers remain flat over the next with the country’s labor market staying weak as well in the succeeding months then it is quite possible for the Fed to indeed do as it is suggesting now.
Canadian Dollar to Make a Comeback Against the Aussie?
Good day FX friends! Today, I present to you a look at the currency cross, AUDCAD. As you can see from its weekly chart, the pair has been trading very well since it touched a low of 0.8579 back in June this year. Since then, the Australian dollar was able to take the Loonie’s number as the pair hit parity (1.0000) and even went on to reach a high of 1.0023 last September 23. Technically, however, the pair’s recent uptrend maybe starting to reverse already. For one, it failed to completely overpass its previous high at 0.9915. The pair has also formed a shooting star candle pattern, indicating that the prior move up north maybe losing momentum. With the stochastics also in the overbought region, the pair could indeed weaken by either moving sideways or reverse. If can find support just above 0.9200 in case it does reverse. On the positive side, a successful breach above the shooting star’s high could propel the pair to its next notable high at 1.0550.
The Reserve Bank of Australia decision not to increase its interest rate from 4.50% to 4.75% caught the market by surprise. As a result, the Aussie lost some of its appeal. The rapid rise of the currency against most of the majors have prompted the RBA to postpone its rate hike. Still, the central bank remained somewhat hawkish stating that “If economic conditions evolve as the board currently expects, it is likely that higher interest rates will be required, at some point, to ensure that inflation remains consistent with the medium-term target.” Aside from this suprise, the weaker-than-expected growth in the country’s retail sales (0.3% versus 0.5%) also placed some selling pressure on the Aussie.
On Canada’s side, its latest employment figures will be out this Friday (October 8). Canadian firms are seen to have added 11,300 more jobs which would have brought the country’s jobless rate down to 8.0% from 8.1%. Improvement in the labor market, of course, would reflect positively on the economy of Canada and on the CAD at least in the short term.
Will the Australian Dollar Reach Parity With the USD?
Will the Aussie reach parity with the US dollar or even better in the months to come? Technically speaking, there’s a good chance that it would. As you can see from its daily chart, the AUDUSD pair has recently broken out from a descending right-angled broadening triangle. Having past the 0.9350 and 0.9400 hurdles, the pair could now aim for 1.0000. It could, however, encounter some resistance at its all-time high at 0.9849 which it set back in 2008. Nonetheless, a move above this level could put the AUD on track towards dollar-parity. In fact, if we project the height of the pattern from the point of breakout, its upside target is even better – 1.0600. And as long as the pair’s uptrend channel remains intact, I could say that the Aussie has some more room to move north. But with its present overbought conditi0n and the wall that it is seeing at the channel’s resistance, it could move sideways or even retrace for awhile in the near term before making its journey to the heavens.
A lot of high impact economic reports are due in Australia this week. Tomorrow (October 5), Australia’s retail sales and trade balance figures for the month of August will be on deck. Sales at the retail level are seen to have increased again by 0.5% on top of the previous month’s 0.7% gain. The country’s trade balance is likewise seen to tally handsome surplus of A$2.31 billion from A$1.89 billion due to the country’s expansion in exports to China.
Later that day, the Reserve Bank of Australia will also deliver its monetary policy decision. There, the bank is expected to raise its interest rate by 0.25% to 4.75% after 5 months of holding it at 4.50%. The 1.2% growth rate in Australia’s economy during the second quarter of the year plus the recent improvement in the country’s labor market could indeed warrant a hike in the central bank’s interest rate. A rate hike plus the overall weakness in the greenback would make the Aussie more attractive; imagine netting 4.50% (4.75% – 0.25%) just by going long on the AUDUSD.
Australian Dollar To Rise By 10% Against the Yen?
It’s another manic week Forex friends! In today’s FX feature I present to you the daily chart of AUDJPY. As you can see, the pair has recently broken out (upside) from a nice symmetrical triangle formation. This breakout could swing the pair towards its previous high near the 88.00 marker. Projecting the base of the triangle from the point of breakout, the resulting upside target would be at 88.00 as well. The Aussie’s run, however, may be tempered for awhile because conditions are already overbought. The pair could range or retrace shortly before heading north again. And given it’s recent spike, it could potentially form a flag or a pennant pattern. At present, the AUDJPY pair is trading just above 80.00. Therefore, if it reaches 88.00, that would be a sweet 10% gain (1:1 margin).
The recent rally in the global equities market and gold’s rush towards fresh all-time high (see my recent post here) have helped the commodity dollars like the AUD. For this week, no high impact economic reports are due from Australia. The major releases, though, from the US, Canada, and New Zealand would more likely sway the Aussie’s short term movement. The US Fed, of course, will have its monetary policy decision on September 21. Building permits, new and existing home sales plus durable goods orders are due as well from the US. In Canada, the country’s CPI and retail sales accounts are on deck on September 21 and 22. New Zealand, Australia’s neighbor, will likewise publish its second quarter GDP growth. Risk appetite, resulting from one or all the these accounts could benefit the non-dollar currencies like the Aussie. The opposite, however, would weigh on it. Watch out for these reports!
The Aussie’s Due For a Retracement
Happy weekend FX people! On today’s FX feature is an update of the AUDUSD pair which I posted last September 5 (please see it here). As you can see, the pair has continued to rise within an ascending channel. And as I’ve suggested, the pair indeed rose to mark its fifth wave (wave 5). If the Elliot Wave Principle holds true and if my wave counting is correct then as the theory suggests, the pair should be due for a retracement. Remember that the EWP predicts a correction in the prices after the completion of the fifth wave, starting with wave A and ending with wave C. And given the obvious technical resistances ahead and an overbought condition as indicated in the stochastics, the pair could indeed dip or at least move sideways. If the Aussie weakens against the US dollar, the peak of the third wave around the 0.9200 level and the channel’s support should keep it from falling further.
The Aussie along with the non-dollar currencies rose this Friday due to the better-than-expected July wholesale inventories report in the US. Wholesale inventories has risen by 1.3% as compared to the 0.4% market forecast. China’s better-than-projected industrial production (13.9% vs. 13.1%) , retail sales (18.4% vs. 18.0%), new loans (545 billion vs. 500 billion), M2 money supply (19.2% vs. 17.5%), and the slower PPI (4.3% vs. 4.6%), have also helped the Aussie. Remember that Australia is one of the biggest supplier of raw materials to China. Hence, an increasing business activity means more business for Australia. A weaker PPI, in the same way, benefits the Aussie since a monetary tightening by the Chinese government would be postponed which would allow for business to go on without additional restrictions as of the moment.
For the coming week, no market moving events are scheduled in Australia. Given the lack of economic reports from the country, investors could take this as a chance to pocket some of their profits from their long Aussie positions.
Australian Dollar’s Silent Rise
Good day to you my fellow FX men and women! Today I present to you the daily chart of the AUDUSD. As you can see, the pair has been trading within an ascending channel since the middle of May 2010. Of course, the pair would more like trend higher as long as the channel’s support does not buckle. The Aussie, however, could meet some resistance at the pair’s previous high near the 0.9200 level. With the stochastics in the overbought area, it could rest for a while before making another move to the north. A move past the 0.9200 level could push it towards 0.9300. The Elliot Wave Principle (EWP) also seems to confirm this potential price action. If my wave counting is correct, the AUDUSD could already be in its fifth wave. This then suggests that the next short term up-move would more likely surpass the peak at 0.9200.
Recent economic data in Australia goes to support the positive sentiment towards the Aussie. For one, the corporate profits of Australian firms for the second quarter of the year have unexpectedly soared by 18.9% compared to the market’s 5.9% growth forecast. The firms’ 1Q scores were also positively revised to 4.3% from 3.9%. The country’s building approvals have also expanded for the first time in 5 months. The account surprisingly rose 2.3% in July after dipping by 3.4% during the previous month. Retail sales for the same period have also shown some good figures, expanding by 0.7% in July and 0.4% in June. More importantly, the country’s second quarter gross domestic product (GDP), has surpassed the market’s 0.9% forecast with a 1.2% growth. the first quarter’s overall output expansion was also revised upwards to 0.7% from 0.5%.
On Tuesday (September 7), the Reserve Bank of Australia will have its monetary policy decision. While the bank is still expected to hold its benchmark interest rates at 4.5%, the bank’s tone would more likely lie towards the hawkish end of the spectrum given the improvements economy. Any positive outlook regarding the country would of course be bullish on the Australian dollar as well.
A Bearish Pattern in the AUDJPY – August 31, 2010
Hello forex peeps! For months now, the AUDJPY currency pair has been moving sideways. Apparently it has been setting up a triangle formation in its daily chart and could be bearish as it came from a downtrend four months ago. So is the AUDJPY currency pair bound to go lower? I would say “yes” once it breaks below the current support line (red line). If it does, it could head all the way down and test the 70.00 psychological support (black line) until it further drops again. On the upside, if AUDJPY manages to climb up, it could first test its current resistance (blue line). Once that hurdle get cleared out, there could be some selling pressure at the next resistance at the 80.00 psychological area.
The Aussie Bears’ Return – August 25, 2010
It’s a bad day for the Aussie bulls since it seems that the bears have just taken over the trading driver seat. As you can see from the AUDUSD’s 4-hour chart, the pair appears to have broken down from a head and shoulders pattern. Remember that the Australian dollar had risen to as much as 0.9200 over the greenback early this month after touching a low of just above 0.8100 in June. though, by the looks of it, it’s luck has already turned. Yesterday’s movement pushed the prices below the pattern’s neckline and also under the previous resistance-turned-support. Given this, the price could head all the way down to 0.8500 though the previous support at 0.8600 could possibly halt its descent. In any case, things still look bearish for the AUD unless it is able to move back up above the neckline.
Due tomorrow (August 26) at 00:00 GMT and at 1:30 am GMT are Australia’s Conference Board leading index for the month of June and the country’s second quarter private capital expenditure. The CB leading index had risen by 0.3% in May though it could print a lower gain or even a contraction given Australia’s weak home loans figure and the country’s high unemployment rate. In case you do not know, home loans have fallen by 3.9% in June after posting a jump of 3.0% during the other month. Unemployment rate has also jumped to 5.3% from 5.1%. The country’s private capital investments for the 2Q, on the other hand, is projected to have expanded by 2.3% after dipping by 0.2%. Capital investments take up about 28.54 of Australia’s overall GDP or output. Hence, an increase in this number could push the Aussie higher in the near term. Though in my opinion, a hike of 2.3% or lower is not enough to push the Aussie back on the bullish track unless of course the figure prints a much stronger score. Watch out for the report tomorrow!
The Euro Remains in a Funk Vs. the Aussie – July 9, 2010
Good day forex people! Here’s an update on the EURAUD pair which I last posted way back on May 26 (kindly see that post here). As you can see on today’s chart, the pair has continued to slide when it hit a resistance just below 1.5500 after moving past above the shorter term downtrend line. It then fell only to rebound for awhile when it found some support at 1.4000. Its rise, however, was halted yet again by the same downtrend line. Given its overbought condition and the presence of a hidden bearish divergence, where the price registers lower lows and the stochastics mark higher highs, suggest a likely move lower. The 1.4000 marker would be its likely support if it continues to trek south. A break of the downtrend line, though, could bring it back near 1.5500.
The euro’s rally was recently overturned by the Aussie. Despite the decision of the Reserve Bank of Australia to keep its benchmark rate unchanged at 4.50%, traders still picked up the Aussie given the governor’s somewhat bullish outlook on the country’s economy. He mentioned that Australia will likely benefit China’s growth since the former is one of the biggest supplier of raw materials to the Chinese.
A couple of other economic reports supported the AUD. First is the better-than-expected May trade balance which came in at A$1.65 billion which was way over the A$0.53 billion projected. Its April’s number was also positively revised to A$1.12 billion from A$0.13 billion. Australia’s labor market also showed some improvements with firms adding another 45,900 workers in June (vs. 15.3k estimate), which pulled the country’s jobless rate down to 5.1% from 5.2%.
No other reports will come out of Australia for the rest of the week. France, on the other hand, will publish its May industrial production which is seen to have gained by 0.3% in after dipping by 0.3%. Germany recently posted an upside in the same account. Such could also be the case for France. In any case, a rise of at least 0.3% could give the euro some short term lift against its peers like the AUD. Between the euro zone and Australia, the latter, however, remains to be the stronger one. And between the euro and the Aussie, the latter remains to be the more attractive given its interest rate advantage (4.50% as against 1.0%).
Aussie Bulls Refusing to Give Up – July 8, 2010
In my last post about the AUDUSD pair, I mentioned that if it falls below the neckline of the double bottom, it would likely sink further until it sees some support at 0.8300 or at 0.8100 (kindly check my previous post here). As as you can see, it indeed consolidated into a smaller double bottom after touching 0.8300. It then broke out of this pattern to keep itself back up again above the neckline of the bigger double top formation. In my opinion, those who are long on the Australian dollar would be in a safe position as long as the AUDUSD pair stays above the mentioned significant level (0.8600). Moreover, the pair could further go north since the stochastics are still far from the overbought region. But if fear makes a comeback and the Aussie slides below 0.8600 again, its likely stop would then be at 0.8300.
Just yesterday, the Reserve Bank of Australia kept its interest rate unchanged at 4.50% due to the recent unrest in the global equities markets and Australia’s less-than-stellar CPI and GDP figures.Note that central banks generally hike their rates to control inflation and growth. While the country’s year-over-year CPI in March printed a strong 2.9%, its GDP failed to impress, growing by only 0.50% during the first leg of the year as against the 0.60% prediction. Australia’s housing industry remained damp as seen in the building approval’s 6.6% decline in May. Moreover, Australia’s retail sales continued to fall below the market’s expectation with only a meager 0.2% gain in May.
Despite the above, traders still picked up the Aussie given RBA Governor Glenn Steven’s positive comments regarding the economy. He said that Australia’s expansion would accelerate from its present pace as China grows. Apparently, the governor sees a rapid expansion in the Chinese economy as well as evidenced by their 50% export gain during the last month. Steven highlighted china since it is Australia’s biggest export market. A growth in the Chinese economy, particularly in its exports sector would likewise benefit Australia. But as I’ve mentioned in my post regarding China (kindly see it here), its economy has already started to swing south as evidenced by the breakdown in the Shanghai’s Composite Index. If this is the case, then China’s growth would likely decelerate and so as Australia’s.
The Aussie’s Hanging By a Thread – June 30, 2010
Good day forex people! Here’s an update of the AUDUSD pair which I posted back on June 22 (click here to see my previous entry). Anyway, the Aussie bullish run was cut short last night due to a slide in the global equities markets. The Aussie skidded from 0.8709 to settle at 0.8463 against the greenback in yesterday’s bloodbath. Looking at the pair’s 4-hour canvas, you can see that it has retreated even past the neckline support of its previous double bottom after reaching a high of 0.8859. The only net that is keeping it afloat now, in my view, is the 0.8500 psychological support. If this number gives way, the Australian dollar could further return its gains over the USD and the pair could fall towards 0.8300 or 0.8100. However, given the oversold conditions, traders could view the AUD as ‘cheap’ which could lead them to push it back higher. If the fear in the market dissipates and buying resumes, the pair could at least reach for the resistance just below 0.8800.
The Aussie’s slide yesterday was due China’s leading economic indicators for April cooled down 0.3% after posting a jump of 1.7% during the month prior. This unexpected figure stirred some concerns that the present global growth may not be as strong. Remember that China, as of now, is the world’s second largest economy. With the ongoing fiscal crisis in Europe and the US’s mixed economic standing, a dip in China’s economy could further add a lot of bearish pressure on the markets.
China also has a big impact on Australia because the latter is one of the former’s major trading partners. A dip in China’s economy could mean lesser exports, hence, lesser growth for Australia. Tomorrow (July 1), China is set to publish its latest manufacturing PMI figure. The index is also seen to have cooled to 53.2 from 53.9. If such decline indeed happens, the Aussie could once again take a hit. On separate news, Australia will likewise release its May building approvals and retail sales. Building approvals are projected to hold steady after falling sharply by 14.8% the other month. Retail sales on the other hand, are expected to have gained again by 0.3% on top of the 0.6% rise in April. Upbeat figures from these two accounts could support the Aussie while bleak numbers could obviously push it lower.
2010 Global Gold Rush – June 28, 2010
Here’s an update on the price of gold from my previous most last June 10. As you can see, the price of gold has skyrocketed over the last couple of months and has yet again registered a new all-time high of $1,265.05 per ounce last June 21. It could aim for a new high in the coming days since its short term uptrend line is still well intact. Though, since its stochastics are still far from the oversold area, it could range for awhile or even retrace back to the support at $1,160.00 or at the long term uptrend line. In any case, the price of gold would likely continue to move higher in the longer term until it breaks its uptrend and reverses.
The increase in the demand for gold in the last several months is primarily due from both price speculation and market fear. It is important to note that gold bares no interest and dividends to its investors but given its intrinsic value, its one of the best assets out there that protects the investors money from inflation. Given the ongoing debt crisis in Europe and now the weak economic data from the world’s biggest economy, the US, fear is slowly making a a comeback. With the Fed’s near zero interest rates and its recent dovish comment regarding the US’s economy and their future policy, it’s no wonder why investors seek gold as a safe haven. Given the uncertainties in the market, both in Europe and in the US, any downbeat developments could send the price of gold higher. Such, though, could benefit the mining industry, specifically the gold miners. The commodity dollar like the Aussie, Kiwi, Loonie, and Swissy could also get some support with the increase in the price of gold.
Aussie: A Pause Before Another Leg Higher – June 22, 2010
Like the NZDUSD pair in my other post today, the AUDUSD had also broken out from a double bottom formation. After doing so, it then consolidated within an ascending triangle before moving north again. And like the New Zealand dollar, the Aussie made a runaway gap over the dollar as well to start this week’s trading. Now, a bullish runaway gap is a gap on the price chart that occurs during strong bull movements. It usually occurs near the middle of the identified uptrend and can be seen as a signal of an increase in the trend’s intensity. With an overbought condition, the pair could, however, consolidate for awhile again or even retrace before continuing its trek upward. If the Aussie weakens, it could fall back to the bottom of the gap before aiming for its minimum upside target, which is computed by projecting the height of the double bottom from the point of breakout, near 0.9050.
As I’ve mentioned in my other post, this week’s gap among the higher yielding currencies like the AUD was due to the news that China would make its currency, the Yuan, more flexible. At present, the Yuan is pegged to the USD, making its value artificially low. Now, a weak currency is in a sense good as it makes a country’s exports relatively cheaper. It’s no wonder why China was able to post a 50% year-over-year jump in their exports last month. Moving to a more flexible currency policy would negatively impact China’s exports but the flip side is it would make the ones priced in other currencies (products from S. Korea, Germany, the UK, the US) more competitive in global trade. Once this happens, China’s economy would move to a more balanced one and the Western’s exports industry would improve.
Sentimentally, this would be positive for the likes of the Aussie. Fundamentally, however, it would such would be bearish on it. Why? Well, Australia is one of China’s biggest supplier of raw materials. If China’s exports dip, its demand for raw materials would decline as well. But that’s over the long term.
In the mean time, the Aussie could get some lift today if at least one of the high impact reports from Germany, Canada and the US prints an upbeat figure. Germany is slated to report is Ifo business climate today which is seen to taper a bit to 101.2 from 101.5. Canada’s inflation numbers are also due with the core account projected to rise again by 0.3% and the headline figure to post a modest gain of 0.1%. Back stateside, the US will then make public its latest existing home sales which is expected to have reached 6.17 million during the last month. Stay tune for these updates!
