Article by ForexTime
The AUD/USD moved lower on Monday notching up a fresh 6-month low as commodity price weakness, continues to drag on the currency pair. The continuing swing in the commodity cycle is pressuring the currencies. The Bloomberg Commodity Index dropped putting the index at a new five-year low after four consecutive daily declines. Nickel has led declines Monday with a 3.4% dip , while zinc is off by over 2%, gold is near its 2014 low and silver prices have made fresh four-year lows.
Remarks from China’s finance minister was a bearish catalyst as he said Beijing will not make any “major policy adjustments” in light of recent weak data. The decline in the AUD is welcomed by Reserve Bank of Australia as policymakers have been arguing for much of the year that the currency is overvalued relative to the shifting terms of trade picture.
Finance Minister Lou Jiwei said over the weekend that China will not dramatically alter its economic policy because of any one economic indicator. Lou made the comments at a meeting of finance ministers and central bank governors from the G20 countries in Australia, according to a statement from the People’s Bank of China.
The recent decision from the FOMC is also helping the dollar gain traction. The increase by the FOMC in their forecast of rates, has pushed the 5-year U.S. yield to 2014 highs allowing the interest rate differential to move in favor of the greenback.
Target support on the currency pair is seen near the 2014 lows at 0.8860. Resistance is seen near the 10-week moving average eat 0.9260. Weekly momentum has turned negative with the MACD (moving average convergence divergence) index generating a sell signal. This occurs when the spread (the 12-week moving average minus the 26-week moving average) crosses below the 9-week moving average of the spread. The index moved from positive to negative territory confirming the sell signal.
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Article by ForexTime
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