AUD Respects Support, Rally Back to Ascending Channel
By: Eddy Peng Jun 26, 2017Chart 1: Developed countries’ household debt to GDP
There is a problem in Australia that the record-low interest rates allow buyers to borrow large amounts of money, which would boost household debt further and continue to push real estate market, especially in Sydney and Melbourne which attract enormous investment from Chinese buyers. Regarding worries over high level of debt from policy makers, the bank regulator is prompted to enforce measures to rein in riskier mortgages and strengthen lending standards, when the RBA (the Reserve Bank of Australia) noted in April that a third of mortgage holders had either no buffer or not enough of one to cover a month’s repayment. The borrowers with high risks tend to hold newer loans or come from lower-income and lower-wealth households. Aussie dollar climbed 0.28 percent to US$0.75813 as of 12:50 p.m. in Sydney. Technically with the bullish Relative Strength Index of 58.3327, the AUD/USD is consolidating in a developing ascending price channel. With a sign of rising tendency, it likely continues to rally and move in this price channel. In the event that the AUD/USD edges higher, traders should first watch for the pair breakout above Jun 14th’s high of 0.76354. Alternatively if prices reverse lower, the AUD/USD must first break beneath the lower channel line, then test last Friday’s low of 0.75361.Chart 2: AUDUSD Daily