On the Australian dollar further growth in question

The victory of the Australian Labor Party in the last election provided short support for the Australian dollar (AUD), delivering the market from the uncertainty associated with the possible “suspended parliament”.

This was stated by David Forrester, senior currency strategist at Crédit Agricole*. According to him, it was possible to avoid the script in which the Laborists would hold in power, relying on the support of the "green", which could adversely affect the currency.

However, despite this positive impetus, Forreter believes that the further growth of AUD is limited by a number of factors.

Revaluation and fundamental indicators:

Форрестер подчеркивает, что, согласно модели FAST FX от Crédit Agricole, AUD/USD значительно переоценена. Модель учитывает краткосрочные фундаментальные показатели, включая процентные ставки в Австралии и США, спреды доходности, а также цены на металлы и энергоносители. Отклонение от этих показателей указывает на то, что текущая стоимость AUD не соответствует фундаментальным экономическим реалиям.

Influence of China:

The key factor restraining the growth of AUD is the situation in China. Forrester notes that PMI data (indexes of business activity) turned out to be worse than expectations, which indicates the negative impact of tariffs introduced by the Trump administration on the Chinese economy.

“China has returned from the holidays dedicated to the Day of Labor, and recorded the USD/CNY course above 7.20 and at a high level compared to the fall of the USD/CNH course. AUD/USD and USD/CNH still greatly correlate in the opposite direction, ”Forreter explains.

Simply put, the weakening of the Chinese yuan (CNY) is pressure on the Australian dollar, given the close economic ties between the two countries.

Technical resistance:

From a technical point of view, the Aud/USD pair is faced with a serious resistance in the region of 0.6450/70, where the 200-day sliding average is located.

“The Aud/USD movement is above the 200-day sliding average will be the first from the beginning of November and will mean a serious change in the exchange rate,” Forrerester emphasizes.

Conclusion:

В заключение, победа лейбористов оказала кратковременную поддержку австралийскому доллару, но дальнейший рост валюты ограничен рядом факторов, включая переоцененность, влияние китайской экономики и техническое сопротивление. Инвесторам следует внимательно следить за развитием ситуации в Китае и за тем, сможет ли AUD преодолеть сопротивление на уровне 200-дневной скользящей средней, чтобы оценить перспективы дальнейшего движения валюты.

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