The Australian dollar has drifted a little bit lower during the trading session on Friday, as the Australian dollar is a proxy for China, it makes sense as the Chinese Communist Party suggested that the trade talks were going anywhere anytime soon. If that’s going to be the case, then of course the demand for the Australian raw materials will drop. Interestingly enough though, we are still in the middle of the major support range, and as a result it’s going to be difficult to suddenly melt down without some type of catastrophic news.
AUD/USD Video 20.05.19
The Australian dollar is highly sensitive to China as you know, but we should also pay attention to the US dollar in general, as it’s the other side of the equation. If the US dollar does start to sell off, this market may rally but I think at this point it really needs some type of Chinese situation to get better. If we were to suddenly turn around, break above the 0.70 level could send this market much higher. If we break down below the 0.68 level, it would be an extraordinarily negative sign.
In the meantime, I expect that the market is going to be choppy and difficult, so ultimately it’s not a market that I’m interested in trading until we get some type of catalyst or a breakout of the 200 point range that I have shown on the chart. The Aussie is essentially “dead money” at this point.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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