Australian Dollar Fundamental Forecast: Neutral
Aussie dollar has undergone a dramatic decline for a second day against the greenback. It was down roughly 1.1 percent and settled at $0.77116 per Australian dollar on Friday, as a hawkish tone was announced by Trump’s new chief economic advisor.
Larry Kudlow, Donald Trump’s new chief economic advisor appointed last week, hit the Australian dollar by supporting a strong U.S. dollar. He also seemed to favour increased tariffs against China with the allies, tell CNBC that that country needed its ‘comeuppance on trade.’ Putting more pressure on trade with China was not good news for the Aussie itself given its vast raw material export links with this world’s second largest economy, who fuelled a lot for Australian economic growth over the past decade.
The Australian dollar is facing Big Thursday this week, as that’s the day when the bulk of likely market-moving news will hit. The market has an universal expectation for another interest rate hike from the US Federal Reserve. Assuming that it is, focus will be on how many more such hikes the Fed now foresees this year.
On the other hand, markets are already priced for another two. So if the Fed just sticks with the status quo with not more hawkish accompanying comment, there could be some downside for the U.S. dollar.Australian Dollar Technical Forecast: Bearish
To look at the daily chart on AUD/USD, we find that the pair is currently moving down along with a downside channel started from mid-January without seeing any evidence for stop. It likely continues to keep its momentum and approach the session high near 0.7649 to find a potential support in the recent days.
Chart 1: AUDUSD Daily
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