During the month of September, the Australian dollar has fallen quite a bit, but it isn't necessarily a problem in Australia.
It's the fact that interest rates in the United States continue to climb.
That being said, when you look at the longer-term charts, we are clearly in a range, with a major support area being the 0.69 level, opening up the possibility of a bounce later this month.
Many external factors to pay attention to
The biggest problem, of course, is that there are a lot of external factors at play here in the AUD/USD pair, not the least of which would be the noise coming out of the Middle East. The Middle East, of course, continues to see a lot of hesitation, and that hesitation, as far as a resolution between the Americans and the Iranians is concerned, continues to be a major reason why inflation is being priced into the bond market.
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In this environment, as long as yields in America rise, it is going to favor the U.S. dollar. That being said, the RBA did hike rates again, and they do sound somewhat hawkish at the moment. With that being the case, I'm not necessarily counting the Aussie dollar out.
I think we have a situation where traders may continue to look to Australia as one of the beneficiaries of commodity prices rising, although Australia will have some inflation issues as well. It at least has a significant sector of its economy that could benefit from higher prices in places like copper.
As things stand right now, this looks like a market that probably is still going to be a little bit weak in the beginning of the month, but it would not surprise me at all to see a bit of a bounce. In fact, if you are hoping for risk appetite to return, that's exactly what you need to see.
That being said, the markets, of course, are being driven by the latest reckless headline coming out of either Washington, D.C., or Tehran. Unfortunately, there's really not a lot the Australians themselves can do about that.
In this environment, I continue to see this as a very choppy and difficult market. More than anything else, I expect it to be somewhat range-bound. If we break down below the 0.68 level, that could make things interesting. But as things stand right now, I just don't see the markets changing quickly.
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