Australian Dollar’s recent rise may halt in coming week
Published on: 10/5/18 10:03 AM
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Over the past three weeks, the Australian Dollar has certainly been on a winning trend. This is especially true when compared to the
American dollar. However, an upcoming meeting could halt the positive trend as investors look towards the latest announcement.
What’s to come?
Next week, all eyes will be on the Federal Reserve monetary policy meeting which takes place on Wednesday in Washington, DC. During this major event, it’s expected that there will be another interest rate hike, making for the third of the year. More importantly, comments that are made by the Fed. Reserve Chairman and others about their stance on the economy could play a major part in the Aussie Dollar’s move.
There have been continued concerns about trade wars involving the United States and China. Australia is tied to both nations in terms of their political and economic situation so rising tensions could affect the strength of the AUD. U.S. President Donald Trump has continued to give “tough talk” as it relates to the trade relations with China. That has cast a bit of a cloud over the general markets in Australia.
Still, a number of AUD investors have speculated that there won’t be a full-blown trade war. That speculation may be driving the three-week highs for the AUD. Also aiding in the recent AUD strength were good economic numbers from Australia including employment levels and the Gross
Domestic Product growth.
Another rise still to come ?
As of this report, the AUD/USD pairing was valued at 0.72680 which is still off the highs from earlier this year around the 0.80 mark. Since January, the AUD chart has displayed a downtrend line and it could continue to test support levels. However, recent movement over the past three weeks has been positive. Investors should tread lightly, though.
Some individuals are quite bearish for the Australian Dollar for the remainder of the year. For example, AMP Capital chief economist Shane Oliver believes the AUD will continue to plummet towards the end of the year. The Australian website reported that Dr. Oliver has pegged a target of about 70 US cents by end of 2018, with the possibility for high-60s by early 2019.
At the moment, many currencies, including Australian Dollar, are also benefiting from global risk appetite. If this trend continues, it could mean more short-term gains, but
Forex brokers and traders should keep a close eye, and ear, on any comments or news made next week at the FOMC meeting. Wednesday will be the big day that many people are circling on their calendars for that very reason.