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August 20, 2021

AUD- Is There Light At The End Of The Tunnel?

Frank Cabibi

8/20/2021

Australia's currency has declined a little over 10% since the beginning of March over various economic and fiscal factors. The country's reserve bank decided that they will not increase interest rates anytime soon as they are waiting for the economy to show some improvement with jobs and growth. Sydney's lockdown has also been extended for another month as cases generate 642 new ones in New South Wales. Despite all of this, Australia's economy was able to add a positive number of jobs this week at +2,000 new jobs, while expectations were -42K.

Our outlook

I think this hard-hitting news of another extension to this lockdown is going to be bearish in the short term. However, I think there could be some bullish potential next week if price begins to stabilize. COT will also be a big factor in deciding whether the buck could be a buy or not. So far, the number of short, non-commercial positions has increased sharply since June. Watching price action next week on the higher timeframes (1D chart) and the COT report this week will be imperative in the buck's direction.

Trade Setups

AUDUSD

AU on the 1D chart gapped lower today after the Australian government decided to extend their lockdown to another month. Potential support lies further below around .70208.

AUDCHF

AUDCHF hits support on the 1D chart around .65092 and looks like it could be rejecting the lows. If price can't maintain above this level, further support lies underneath around .63800s.

AUDNZD

AUDNZD also showing signs of bottoming out here on the 1D chart. Price came down to hit the 1.04163 level and bounced. Judging by the current support and resistance levels, price could be in consolidation for the time being.

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