Currency Analysis Report 10/17/19 - The Aussie Dollar Catching Bids...For Now

A couple of weeks ago the Reserve Bank of Australia reduced the cash rate by 25 basis points to a record-low 0.75% and said it may ease even further, venturing deeper into levels where unconventional measures may need to be adopted. However, the Commonwealth Bank of Australia, the nation’s biggest lender, thinks the RBA will cut rates one more time this year.

I realize we are now in a "risk off" environment again, but I was shocked when I woke up this morning to see the Aussie up almost a full 1%, that a pretty good move for the Aussie in a single day so I had to investigate.

The Australian Dollar got the better of all major rivals Thursday after official figures revealed surprise fall in the unemployment rate, which led investors to pare back their bets on a November rate cut from the Reserve Bank of Australia (RBA), although analysts say the antipodean unit could soon run out of road.

Markets care about the labour market data because falling unemployment and improving job creation are thought to put upward pressure on wages. Pay growth leads to increased demand in an economy and upward pressure on inflation, with implications for interest rates and exchange rates.

Source

Because the Australian economy is a base metal exporting economy, Australia’s GDP relies on China so much, as China goes, the Aussie dollar goes. Thus, I still have a bearish bias on the Aussie, but lets go to the charts to see where the Aussie Dollar is headed next.

Monthly Chart (Curve Time Frame) - monthly supply is at 0.7125 and monthly demand is at 0.6100.

Weekly Chart (Trend Time Frame) – the trend is down.

Daily Chart (Entry Time Frame) – the chart suggests to go short if price pulls back to the daily supply at 0.6920.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.