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7 Oct 2013
AUD/USD trading in the upper level ignoring US political “woes”
FXstreet.com (Athens) – The AUD/USD had been trading consistently upwards since the kick off of the weekly trading session on Sunday, but after the World Bank cut China 2013 growth outlook to 7.5% from 8.3% previously estimated, the cross touched its session lows.
AUD/USD runs out of steam after the World Bank cut China’s growth outlook
The AUD/USD continues to set up an uptrend momentum, despite the globally risk-off sentiment amidst the continuing uncertainty in US debt ceiling as well as on the US government shutdown issues. It seems that the “Aussie” is currently ignoring the global “jitters” inspired to a major extent by US political turmoil, as Australia seems to enter a new growth cycle. Elaborating on, according to James Glynn, Editor at the WSJ, "several recent indicators are spurring hope that the slowdown is ending." Moreover, as Glynn argues "Australia’s manufacturing sector expanded for the first time in more than two years in September, while house prices rose strongly in August and retail sales beat expectations. The data followed news of a surge in consumer and business confidence since the Sept. 7 federal election, when the conservative coalition turfed out the Labor government."
Signs that Australia enter a phase of economical rebound
As well depicted in a couple of articles last week, there are two main key drivers that might push Australia’s economy back on track, while might also convince RBA to move on more growth-oriented policies. Elaborating on, according to Westpac, there are signs that indicate the housing market in Australia is picking up, with the Bank's Economists noting "the last few months have seen a significant shift in Australia's housing markets with a surge in auction activity and signs of a quickening in price growth." Furthermore, Gibbs, Strategist at RBS, notes: "the LNP - now in power - is attempting to turn the debate towards more government infrastructure spending, borrowing more, running a bigger budget deficit for longer. From a markets perspective, Gibs mentions that this "should mean the down-turn in the “Aussie” and period of low interest rates may be less than otherwise." There is also an interesting survey confirming to a major or less extent the above; traders are not pricing in any further RBA interest rate cuts over the coming 12 months, according to data from Credit Suisse. Finally, traders should in any case bear in mind that “Aussie” might get severely wounded be reports and data showing that the second biggest economy all over the world, might continue to grow in a more sluggish mode, as China, is by far the biggest trade partner of the Australia economy.
Technical perspective and outlook on the AUD/USD
Emmanuel Ng of OCBC Bank, mentions that negative dollar vibes may continue to support the pair with the Australian Sep services index also improving significantly to 47.1 from 39.0 the previous month. We retain a buy dips posture for the pair in the interim with base building behavior still expected around current levels. Support is seen on dips towards 0.9285 area while 0.9435 should cap pending further cues.” We would like to add a personal aspect of view regarding the cross as seems that according to data, there are still a lot of short positions in the Aussie dollar which if being hit by stop loss (seems very probable) will boost the “Aussie” further upwards.
AUD/USD runs out of steam after the World Bank cut China’s growth outlook
The AUD/USD continues to set up an uptrend momentum, despite the globally risk-off sentiment amidst the continuing uncertainty in US debt ceiling as well as on the US government shutdown issues. It seems that the “Aussie” is currently ignoring the global “jitters” inspired to a major extent by US political turmoil, as Australia seems to enter a new growth cycle. Elaborating on, according to James Glynn, Editor at the WSJ, "several recent indicators are spurring hope that the slowdown is ending." Moreover, as Glynn argues "Australia’s manufacturing sector expanded for the first time in more than two years in September, while house prices rose strongly in August and retail sales beat expectations. The data followed news of a surge in consumer and business confidence since the Sept. 7 federal election, when the conservative coalition turfed out the Labor government."
Signs that Australia enter a phase of economical rebound
As well depicted in a couple of articles last week, there are two main key drivers that might push Australia’s economy back on track, while might also convince RBA to move on more growth-oriented policies. Elaborating on, according to Westpac, there are signs that indicate the housing market in Australia is picking up, with the Bank's Economists noting "the last few months have seen a significant shift in Australia's housing markets with a surge in auction activity and signs of a quickening in price growth." Furthermore, Gibbs, Strategist at RBS, notes: "the LNP - now in power - is attempting to turn the debate towards more government infrastructure spending, borrowing more, running a bigger budget deficit for longer. From a markets perspective, Gibs mentions that this "should mean the down-turn in the “Aussie” and period of low interest rates may be less than otherwise." There is also an interesting survey confirming to a major or less extent the above; traders are not pricing in any further RBA interest rate cuts over the coming 12 months, according to data from Credit Suisse. Finally, traders should in any case bear in mind that “Aussie” might get severely wounded be reports and data showing that the second biggest economy all over the world, might continue to grow in a more sluggish mode, as China, is by far the biggest trade partner of the Australia economy.
Technical perspective and outlook on the AUD/USD
Emmanuel Ng of OCBC Bank, mentions that negative dollar vibes may continue to support the pair with the Australian Sep services index also improving significantly to 47.1 from 39.0 the previous month. We retain a buy dips posture for the pair in the interim with base building behavior still expected around current levels. Support is seen on dips towards 0.9285 area while 0.9435 should cap pending further cues.” We would like to add a personal aspect of view regarding the cross as seems that according to data, there are still a lot of short positions in the Aussie dollar which if being hit by stop loss (seems very probable) will boost the “Aussie” further upwards.