The recovery is over for the Aussie dollar: AUD/USD plunged to a new 33 month low of 0.9133 as the week, month and quarter come to an end.
Where to next? The 0.90 line is not that far. With all the bearish forecasts on the Aussie dollar, on China and on the global economy, the pair could challenge this line as early as next week.
The previous break down followed the FOMC statement: Bernanke talked about tapering and this pushed AUD/USD to a low of 0.9163. It then recovered and even recaptured 0.93. However, it couldn’t hold on to its gains and now the downfall accelerates on adjustments that happen at the end of periods.
The US dollar also got a small boost from consumer confidence: the revised version of the University of Michigan’s figure was higher than the original publication: 84.1 instead of 82.7. It was also better than 83.1 expected.
Here is how it looks on the weekly chart:
Next week, the RBA convenes for its monthly rate decision. A “no change” decision is anticipated. The RBA began the avalanche by cutting the rates in May. The strong Aussie was one of the reasons for the crash. With the Aussie at its current shape, there is no need for further action.
Will the RBA choose to take the other direction and try to lift the Aussie? Probably not.
For more, here is the AUDUSD weekly forecast.
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