Australian Dollar Exchange Rate Outlook is Higher

Australian Dollar Rate Outlook

Some of the Foreign Exchange charts are peculiar. We understand the US dollar Swiss franc chart is strange because of the carry trade/safe-haven/intervention stories. But look at the Australian Dollar chart. When we draw a channel from the lowest low in November, what we get is a horizontal, flat channel, not a rising one. Of course we can draw a channel in a shorter time frame and get an upmove, but in the Big-Picture, we do not get a true rising trend. This could imply that some foreign exchange traders are buying "commodity currencies" on a bet that US recovery will boost demand, but they are not really committed to the global recovery scenario just yet. Given the relatively high yield in the Australian Dollar, we think it should be higher….

Since it's not, traders are not yet convinced the recession bottom is in.

The flat AUD makes us suspect the euros to US dollars uptrend. Maybe it’s just a "move" and not a trend. The euro/yen is rising without pause or correction, so have to wonder if the euro exchange rate is strong mostly because the yen is weak. Today is "pullback Tuesday" and we are getting the usual profit-taking after a big move the week before, but we also wonder if the pullback could take on a life of its own. As foreign exchange traders, we must jump on every bandwagon and seeming breakout, but as economic analysts, we need to look at a wider timeframe chart and this time the wider chart is not offering comfort and confirmation.

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Pounds to Australian Dollars = 2.0935
Euros To Australian Dollars = 1.9384
Australian Dollars to US Dollars = 06965
Australian Dollars to New Zealand Dollars = 1.2394

Bye For Now

Barbara Rockefeller
Foreign Exchange Trading
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