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AUD/USD remains the weakest link – 3 reasons

The  Australian dollar enjoyed a short relief thanks to the RBA meeting minutes, but this correction seems to have been a sell opportunity. AUD/USD fell back to the lower range under 0.73

While the USD is gaining ground all across the board thanks to a hawkish tone from 3 FOMC members, the Australian dollar remains the weakest link, suffering the biggest losses.

There are three reasons for this:

  1. Disappointing Australian wages: The Australian Wage Price Index rose only 0.4%, worse than 0.5% expected. Also year over year, the rise is only 2.1% and not 2.2% expected.
  2. Worries about Chinese debt: The story about a credit bubble in the Chinese private sector and especially around housing is not new, but it has been echoed several times, especially after The Economist made an in-depth article. The headlines and comments are  incessant.
  3. Caution ahead of the Australian jobs report: After a few strong months of job gains, the labor market cooled down in the land down under. A positive surprise was seen in the March report, but many analysts see this as a one-off. The expectations for the April report coming out soon are already lower and  probably for good reasons.

See how to trade the  Australian jobs report with AUD/USD.

Here is how it looks on the hourly chart:

AUDUSD lower May 19 2016 weakness

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.