(Christina Parthenidou – XM)
AUD/USD flirts with July’s low, outlook discouraging
AUDUSD almost touched July’s 26-month low of 0.6680 on Wednesday before bouncing up to finish the session with mild gains.
The soft upward move, however, was not enough to shift the odds to the bullish side as the RSI keeps pointing downwards well below its 50 neutral mark, while the MACD remains negatively charged below its zero and signal lines too.
Hence, the bears may stay on board for now, aiming for an aggressive attack towards the next barrier of 0.6550 once the base around 0.6680 gives way. Even lower, selling pressures could further intensify to meet the 0.6400 round level last active during April-May 2020. This is also where the 161.8% Fibonacci extension of the previous bullish wave is placed.
Otherwise, a continuation higher may initially re-challenge the weekly bar of 0.6825, where the 61.8% Fibonacci happens to be. Then, if the 0.6875 – 0.6900 constraining zone, which encapsulates the 20- and 50-day simple moving averages (SMAs) and the 50% Fibonacci, proves fragile this time, the recovery could extend towards the tentative descending trendline at 0.6962.
All in all, AUDUSD maintains a discouraging outlook near July’s low. A close lower is expected to motivate a sharp decline towards 0.6550.
WTI futures retreat to 7-month low as negativity persists
WTI oil futures (October delivery) have been losing ground since mid-August when the price failed to surpass the 97.70 mark. Moreover, apart from the price trading below its lower Bollinger band, the 50-day simple moving average (SMA) has dropped beneath the 200-day SMA completing a ‘death cross’, both reinforcing the thesis for a sustained bearish outlook.
The momentum indicators also suggest that near-term risks are tilted to the downside. Specifically, the stochastic oscillator is descending in the 20-oversold zone, while the MACD histogram is extending its retreat beneath both zero and its red signal line.
To the downside, further declines could cease at the seven-month low of 81.50. Dipping beneath that region, the bears could target 77.20 before the spotlight turns to the December 2021 resistance zone of 73.00. Even lower, the December support of 66.00 may prove to be a tough hurdle for the commodity to overcome.
On the flipside, bullish actions could propel the price towards the recent support zone of 85.50, which may now act as resistance. Conquering this barricade, the price might ascend towards 90.00 or higher to challenge the August peak of 97.70. A break above the latter could open the door for the 102.00 region.
Overall, WTI oil futures’ short-term picture is likely to deteriorate even further as the commodity appears to be facing tremendous downside pressure. For that bearish tone to reverse, the price needs to jump above the 97.70 ceiling.
Time still right for AUD/NZD falls? [Video]
(Giles Coghlan LLB, Lth, MA – HYCM)
Heading into the latest RBA meeting this week it made sense to be short the AUDNZD. There were three key reasons to expect AUD weakness against the NZD.
- China’s growth is slowing and the AUD tends to rise and fall with China’s economic growth.
- The key export commodities from Australia have seen lower prices. Iron ore, coal, and copper prices have all been tracking lower on global growth slowdown worries.
- The veteran economist Saul Eslake sees the RBA abandoning the 50 bps rate hike going forward. He expects unemployment to rise and GDP to miss the RBA’s projections.