AUD under stress from RBA and Iron Ore woes

AUDUSD, H4                 

The AUD has had a rough session so far today and is nursing a loss of over 0.6% versus the U.S. buck, yen and euro, having taken a hit from the increased cautiousness of the RBA, displayed in the minutes from the early-April policy meeting, and from a dive in iron ore prices today. RBA minutes noted that the labour market had “softened” and that “risks associated with the housing market.. had been rising,” and that rising house prices “warranted careful monitoring.” As for iron ore, prices of futures traded on China’s Dalian exchange hit a five-month low today. AUDUSD hit a six-day low at 0.7539, which is looking like the latest down phase of an emerging bear trend that has been forming over the last four weeks. The Australian calendar is fairly quiet for the rest of the week. Australian markets will be closed for ANZAC day next Tuesday, and the Q1 inflation report will be released next Tuesday. External factors will remain the principal driver of the Aussie this week, particularly the evolving stand-off between the U.S. and North Korea.

I am short the AUDUSD from the recent 4 hour candle that closed at 0.7544, the 14 period ATR is the target at 0.7527 as we look to join the retrace back to the daily and 4hr support at 0.7500.  RSI is 41 and falling, the intra-day moving averages crossed at 0.7540 and the Bollinger bands rolled over and are expanding and moving down.  A break of the higher time frame moving average at 0.7590 will negate this move lower.

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Stuart Cowell

Senior Market Analyst


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