Sticking to AUD/USD Shorts, as it Fails to Make Gains on USD Weakness
Recently we have been opening quite a few sell signals/trades in AUD/USD, as you might have noticed on our forex signals page, where we also provide trade ideas/signals on cryptocurrencies, indices and commodities. The situation for the Aussie is such that we will keep opening sell signals in this forex pair on retraces higher.
The USD has turned bearish in the last two days, since the FED cooled off the hawkish rhetoric of the past few weeks. They confirmed the better economic situation in the US, which is an improvement compared to the previous meeting, as you can see from Powell’s Q&A comments below, but they are sticking to temporary inflation, despite its surge to 5.1% and 5.5% in the last two months.
AUD/USD Live Chart
That turned the USD bearish, but the AUD is not taking advantage of the weaker US dollar, since restrictions, lockdowns and protests continue in the country. The AUD/USD wasn’t able to push above the 100 SMA (green) on the chart, while other currencies surged higher against the USD. So we were pretty confident in this trade, which closed in profit. We will be selling this pair again if we see attempts at the upside.
Comments from Powell in the Q&A:
- Still ‘some ground to cover’ before substantial further progress is achieved
- It is clear inflation will be running at 2% for the months ahead
- Repeats ‘some ground to cover’
- We’re clearly ‘a ways away’ from raising interest rates; it’s not on our radar now
- Says he has ‘some confidence’ that medium-term inflation will fall back
- Bond moves might be related to Delta. Also cites technical factors and a fall in expected inflation compensation
- We’re clearly on the path to a very strong labor market
- It’s unusual to have such a high rate of vacancies to workers
- There may be a speed limit with people finding new jobs, it takes time; it’s about job selection
- He suspects impacts of Delta wave will be less, but we will have to wait and see
- Delta could slow the economy down for a period of months or not
- There’s a range of views on what timing will be appropriate
- Today was the first deep dive on the timing
- I’m not meaning to suggest anything on the timing of taper; there’s a range of views
- I’m not in any position to provide any guidance on the timing of the taper
- We’re talking about tapering right now, we’ll take it meeting by meeting
- There is little support for tapering MBS before Treasuries
- Inflation has been driven by a supply-side shock
Quotable on tapering:
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