The Aussie is trading in quite a fix range. Too conflicting forces keep it between the technical barriers. Taking a midweek view, AUD/USD continues to be a very predictable pair.
The Australian economy never dipped into recession. It had only one quarter of contraction in a very bad period for the world. Today’s GDP for the second quarter not only confirmed this status, but also showed the strength of the economy. Australian GDP for the second quarter rose by 0.6% – this was twice as much as early expectations.
This week’s rate decision also confirmed Australia’s title of having the highest interest rate in the West. The Cash Rate of 3% was kept and the outlook by the RBA continued to be positive.
The Gross Domestic Product and the interest rate are the most important indicators, Only employment figures compete with them. So, we should have seen the AUD/USD rise and shine. But the Aussie isn’t alone in the pair.
The US dollar is making nice gains this week. It enjoys strength against the Euro, Pound, Canadian dollar and other currencies. Only the Yen does better, still riding on the results of the Japanese elections.
One of the reasons for the climb is a bad stock market. The dollar and the stock market moves are usually correlated. When the stock markets slump, the dollar rises.
September is historically one of the worst months in the stock markets. Last year featured an extremely bad September, with the collapse of Lehman Brothers. Also this September didn’t start well in the stock markets.
The Aussie wants to rise, and does it successfully against most currencies. AUD/NZD is moving significantly higher. But also the US dollar is also on the rise. So, the pair trades in an almost perfect range.
As mentioned in AUD/USD Outlook, 0.8230 is a major support line, and 0.85 is a major resistance line for the AUD/USD. And how is the pair trading this week: the peak was at 0.8457 and the bottom was at 0.8240. Very impressive!
Will this range trading continue? There are still some major releases this week, with the king of forex – Non-Farm payrolls at the end of the week. So, anything can happen.
But up to now, AUD/USD earns to be No. 1 in the list of Most Predictable Currency Pairs.