AUD to Hit 80: Get Ready!
Rowan Crosby • 1 min read
Over the last few weeks, I’ve been speaking extensively about how the AUD is going to move below 0.7500 in the medium term. I still think that is going to be the case as there is too much that will fundamentally make it drift lower.
However, this week is all about news flow and as traders we need to be prepared for anything. The real focus of the week is, of course, Jackson Hole. Jackson Hole, Wyoming is the location of the annual economic symposium where central bankers, academics, and other policymakers meet to discuss the trends in central banking and the economy.
Jackson Hole is going to put the USD firmly in focus and as a result, the AUD is really just playing second fiddle on a fundamental level. It’s really like big brother pushing little brother around. So as news flow comes in, get ready for large moves in the AUD/USD.
USD to Move
If Janet Yellen goes to Jackson Hole and we get a hint of anything slightly dovish for the USD, then the AUD is going to get fired up. We saw last week with the FOMC how anything that happens in the US puts our AUD technicals to the sword.
We’ve already got an up trend developing in the AUD. Despite the best efforts of the RBA. the 80 cent level is certainly in play and I would be expecting a test of that level if Yellen gives a hint of delaying rate rises or anything that is remotely dovish.
Markets are poised for a US economic recovery and interest rates to continue to climb. Any signs of weakness will hit the USD hard.