The AUD Takes a Hit on Risk-Off Moves
Rowan Crosby • 2 min read
It’s a new day, but the risk-off feel is certainly still in the air and is taking the Asian pairs sharply lower.
China is a key trading partner with Australia and New Zealand and with major areas of China in virtual lockdown, there will likely be a big hit to GDP in the coming quarter.
What this means is that the already fragile Chinese economy, fresh from a trade war with the US, is going to be under even more pressure.
Yesterday, the AUD was the weakest of all the majors and has now dumped hard under a few key support levels.
Looking at the charts and we can see that both 0.6800 and 0.6760 fell away as the sellers really stepped up. Not long ago we were testing the 0.6900 level and we couldn’t make higher prices. So now that momentum is showing up along with some panic selling.
There is a bit of a flight to safety at the moment in assets like GOLD, and again the Asian pairs are at the forefront of this scare.
To the downside now we can look at a few major areas of interest. The most obvious will, of course, be 0.6700 where I think price will get sucked into. We can see there are some minor levels of support between the current price and that support, but I suspect given the selling interest the odds are high that those won’t provide much help.
0.6700 had been virtually impassable in 2019 so it is a huge level. Whether or not this is the catalyst for it to drop remains to be seen, but a test of it is certainly on the cards.