- It’s hard not to notice that the Australian dollar has been struggling over the last couple of days, and I think we got a situation where we are going to have to build up enough momentum to finally break out.
- That would involve a breaking above the 0.6750 level, and if we can break above there, then we could go another 100 pips higher.
- However, this is a situation where markets had recently broken above a major downtrend line, which was the top of the major symmetrical triangle.
Commodities
Keep in mind that the Australian dollar (AUD/USD exchange rate) is highly sensitive to the commodities markets, as the major export of Australia is in fact commodities such as gold, iron, aluminum, etc. Ultimately, this is a market that will continue to use the Australian dollar is a proxy for commodities, and perhaps to a lesser extent the idea of Asian growth. The Asian economy seems to be struggling a bit, just as the rest of the world is, and even though it is not a massive disaster, there are still a lot of questions asked about the idea of inflation.
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Federal Reserve
Most of what we are seeing right now is the fact that the Federal Reserve is front and center as far as the fundamental analysis is concerned, due to the fact that the trading public is trying to sort out whether or not the Federal Reserve will actually cut rates between now and the end of the year. Ultimately, this is a situation where you have to be very cautious with the idea of trying to “front running the Fed”, because people have gotten actually wiped out trying to do so for the last 2 years.
Inflation continues to be a major issue in the night it states, and the fact that we have the CPI and PPI numbers coming out at the end of the week, that could of course have a major influence on what happens with the US dollar, which of course would have a major knock on effect over here.
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