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Commonwealth Bank of Australia change their RBA rate call - on hold during 2017
CBA previously expected a Reserve Bank of Australia rate cut in Q2 of 2017
AUD/USD forecast for the week of November 21, 2016
The Australian dollar fell significantly during the week, reaching towards the 0.7350 level. This is a market that quite frankly looks extraordinarily vulnerable at this moment. And I believe that if we rally it’s a selling opportunity on signs of exhaustion. This is a market that will continue to favor the US seller just as the rest the Forex world has, and with that I have no interest whatsoever in selling as this candle has been very bearish looking indeed. I believe that we will try to reach the 0.70 level underneath.
AUD/USD Weekly Forecast November 21-25
AUD/USD tumbled in the past week, posting the largest weekly loss since the start of May when the Reserve Bank of Australia surprised the markets with a rate cut. The RBA delivered minutes from their latest monetary policy meeting and labor figures were reported out of Australia. The US Dollar continued to dominate with the trade-weighted index (DXY) posting ten consecutive daily gains as markets have essentially fully priced in a rate hike next month and are increasingly optimistic of a pick-up in inflation next year.
The RBA has taken a more neutral tone to monetary policy since the last rate cut in August, and the minutes released this past week reaffirmed little potential for further easing. The central bank expects that their easing efforts this year as well as tightening in the United States will help to lower the exchange rate and boost inflation over the next two years.
Australian labor data indicated stronger full-time jobs numbers, however, employment change fell short of expectations with an increase of 9,800 jobs versus the expected 20,300 jobs. The unemployment rate remained unchanged at 5.6%. Overall the pickup in full-time jobs will be somewhat encouraging but the shortfall in the employment change figure provided no reason for markets to turn bullish the Aussie Dollar.
The US Dollar has been trading sharply higher since the US election and the Dollar index has posted ten consecutive daily gains, breaking to 13-year highs over the past week. A technical break of a consolidation that has been taking place since March 2015 provides a clear bullish signal, and increased optimism for a December rate hike provides the fundamental backdrop for a stronger Greenback into the December FOMC meeting. At the end of the week, the Futures market has indicated a 95.4% probability of a rate hike next month.
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The latest from ANZ's Senior Rates Strategist Martin Whetton on the Australian economy, dollar and rates
ANZ / Roy Morgan Weekly Consumer Confidence from Australia
Australia: Q3 Construction Work Done: -4.9% q/q (expected -1.6% and prior -3.7%)
Data from the Australian Bureau of Statistics on building work
AUD/USD forecast for the week of November 28, 2016
The Australian dollar rally during the we, but the market looks as if it is going to see resistance above, and waiting to see whether the 0.75 level offers that in the sense and forms an exhaustive candle. That of course is a nice selling opportunity but it will probably come off the daily chart more than anything else. Even if we break above there, I think there’s a lot of noise higher that will continue to cause problems. Keep in mind that the gold markets falling apart, and that will continue to be very negative for this market.
ANZ Roy Morgan weekly consumer confidence index 115.4 vs. 115.5 last week
Report released from Sydney for the week ending November 27, 2016.
Australian Building Approvals for October: -12.6% m/m ( expected +2.0%, prior -8.7%)
Australian Building Approvals
AUD: 2 ways to short. Morgan Stanley
Australia's current account deficit position makes AUD vulnerable to global rates and risk sentiment
AUDNZD - China slowing demand for iron ore/Increased demand for dairy.
AUDCAD - US growth spillover
MS maintains a short AUDNZD in its strategic portfolio and promotes selling AUDCAD in is top 10 trades for 2017.
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