Commodity Currencies Take a Dive
Rowan Crosby • 1 min read
The selling has continued to get the week underway, as our US counterparts returned from their long weekend.
While Monday was quiet, it appears that the risk-off tone has continued this week and it was again the commodity currencies and other risk assets that really struggled.
WTI was also a contributor to the falls and for once the USD managed to hold up.
There were clear moves lower in the likes of the AUD/USD and NZD/USD while the USD/CAD broke to the upside for those very same reasons.
It was a funny session in some ways, as there was no real news that drove the declines, it appears it is just more selling. We saw last week that the big tech names started getting sold off hard mid-last week and from that point onwards prices of risk assets haven’t been able to really bounce. Even the strong jobs number wasn’t enough to turn things around.
So in the key risk pairs in the forex markets, we are staring at some downside ahead.
Looking to the AUD/USD, price had been consolidating around the 0.7280 mark, but support broke and the sellers ran it all the way back to the 0.7200 level.
The most recent swing low is sitting at 0.7150, so if we see a break of that level, then the uptrend is over and done with and things could get ugly. However, in reality, these are the very dips that have been getting bought.
It’s the same with equities, where it is hard to find a better option for your money at the moment. With interest rates at record lows, there is still a fairly big incentive to get your money into risk assets like stocks.
I really wouldn’t be surprised to see buying come in when there is some sort of support.