The AUD/USD pair has been sold off relentlessly over the last couple of months, as it is a risk sensitive pair. The falling of risk appetite has been especially tough on this pair, and the fall has been impressive. However, we have seen quite a bit of a bounce since hitting the sub-0.96 region, and as such I have been waiting for a sell signal.
Thursday is shaping up to look like it could be that signal. The fact that the pair attempted a rally, only to fall in the end shows a failure of the bulls to continue to push the pair higher. The gold markets absolutely fell apart during the Thursday session, and this pair will often follow that market’s lead. The lack of an explicit mention of easing by Ben Bernanke in front of the Congress during the Thursday session also weighs upon this pair as it would undoubtedly gain in an easing move by the Fed.
Shooting star
The shooting star for the session on Thursday looks like a great signal, and the fact that it has occurred at the 38.2% Fibonacci level only lends more weight to the idea that this market is failing. The market has bounced, and at this point it looks as if the bears are ready to have another stab at breaking down this market.
The safety trade looks to be coming back into vogue around the markets, and this pair shouldn’t be any different. The single biggest bull market these days seems to be the US Treasury market, and as a result there have been a lot of people forced to buy the Dollar. This should continue as there are a lot of headline risks out there that can push people out of commodities, emerging markets, and other such markets and into the Dollar.
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For myself, I am selling this pair on a break of the Thursday lows, and trying to hold until we get down to the 0.96 level. The buying of this pair simply doesn’t interest me at this point in time. Unfortunately for Australia, they have the rest of the world to deal with, and as long as we are slowing down, the Aussie dollar will suffer.