- The AUD/USD has fallen a bit during the trading session on Wednesday as the market continues to drift around the 0.69 level.
- The Aussie dollar is acting much like the other currencies around the world, as we are waiting to see what the Jackson Hole Symposium is going to bring.
- The candlestick for the day is a bit lackluster, and therefore it’s likely that we will continue to see this market hang about until we get the speech from Jerome Powell at 10 AM Eastern Standard Time on Friday.
Looking at this market, you can see that we have been somewhat sideways for a couple of days, and therefore the market will more likely than not continue to see a lot of choppy short-term behavior. Between now and that announcement/speech, I think what we’ve got going on is a lot of Brownian motion, which is essentially going nowhere.
Noise Ahead
The Australian dollar is highly levered to the commodity markets, so you do need to be cautious going forward, as central banks are more likely than not going to continue to tighten monetary policy, which should drive down demand for commodities, lease in the short term as it will lead people to believe that economies around the world are going to slow down. The market will more likely than not continue to see a lot of nonsense over the next couple of days, so I would not necessarily put a lot of money into it. However, by the time we get to the weekend, we may have a little bit more in the way of clarity as to how the market reads Jerome Powell.
If we break down below the lows of the last couple of days, it’s likely that the Australian dollar will go down to the 0.67 level. On the other hand, if we turn around a break above the 0.70 level, it’s likely that the market will probably go looking into the 0.71 level. Breaking above the 0.71 level could open up the possibility of a bigger move, and therefore it’s likely that we would see the overall trend change. I don’t think that’s going to happen, but it’s likely that we will continue to see a lot of uncertainty, which should lead more of a charge towards the US dollar overall.
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