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AUD/USD: the positive news from China, the tragedy of the Vale and the weakening of grinbek

Analytical reviews Forex 13.04.2019 at 17:07

Daily analytical reviews of the Forex market from InstaForex company

The Australian dollar ended the trading week on a positive note: paired with American currency has updated two-month high, reaching 0,7175. This trend is partly due to the weakness of grinbek, but the Aussie has its own arguments for growth. In General, any more or less large-scale growth aud/usd must be treated with caution: as a rule, the steam reaches the ceiling of the price range and then rolls back. But there is an alternative option in which the pair change price niche – most often in the outline of the current trend, or completely changing the direction of the price on a global scale (which happens much less).

last December, the aud/usd fluctuating in a quite wide price corridor – 0,70-of 0.7250. And bears, and bulls as the pair has repeatedly attempted to break through the boundaries of the corridor, but all of these attempts suffered a fiasco. The fundamental background is too inconsistent, so that investors could hesitate to prefer the North or South. However, the struggle for influence continues, and eventually one side will prevail: either the sellers will be fixed in the region of 0.69 and below or buyers will return the pair in the range of 0.73-0.75 mm (0,7580 to be precise).

At the end of last week, Ozzy made a "serious bid to win," rising almost to the borders of the 72nd figures. And here arises a dilemma: either to sell the pair from the current levels or to "invest" in growth, given the possible conclusion of a trade war between the US and China. The question is really difficult because the Australian dollar is very sensitive to news about the prospects for U.S.-China relations. And if Beijing and Washington will really enter the home stretch of the negotiations this will help the bulls aud/usd to reverse the situation and gain a foothold in the 73rd figure, with the intention of further growth.

all the same, and the momentum of Friday was not bound by the theme of trade negotiations. The pair rose due to the interest of traders to risk-weighted assets, and also due to the weakening of the dollar amid rising commodity market. Interesnoye mood significantly decreased due to the postponement Brekzita, as well as progress in the negotiations between the US and China. In addition, encouraged by Chinese data: first, exports in dollar terms in March increased by 14% after a significant decline of 20% in the previous month. In addition, significantly increased the volume of Bank lending: last month, this indicator increased two times in comparison with the previous period, amounting to nearly 1.7 trillion yuan (that is 251 billion dollars).

Some disappointing imports (index in March decreased 7.6% compared to 5.2% in February). But it is worth noting one caveat: in March, China 10% increased import of soybeans. This is important in the context of U.S.-China trade negotiations. Let me remind you that at the beginning of this year, Beijing agreed to increase the purchase of American agricultural products, primarily soybeans, corn and wheat totaling $ 30 billion. The final volume should exceed even those figures, which were before the trade war. The March figures show that the Chinese fulfill their obligations – at least in this part.

in Other words, the release of Chinese data added to the optimistic fundamental picture has supported the commodity currencies, which can be attributed to the Australian dollar. In addition, the Australian dollar felt the support and against the background of rising raw materials market, in particular copper and iron ore. Unfortunately, this trend has developed "because" of the tragic events. You will recall that at the end of January in Brazil, there was a dam break mine Corrego de Feijao, which is owned by Vale. Waste mining and processing complex flooded a nearby municipality, which killed more than 200 people. Such incidents have consequences – including economic. In late March, a Brazilian court froze the assets of the company worth over four billion dollars, thus cover the potential costs for compensation, wages and other unexpected expenses.

the Commodity market responded instantly: for the first time in a long time, the cost per ton of iron ore exceeded the 90-dollaru the marker (now trading at 95 dollars per ton). The fact is that the Brazilian company Vale and Australian Rio Tinto and BHP Billiton are the largest mining companies in the world (in fact, a monopoly market) and the competition between them has long devalued the price of iron ore. In the end the supply exceeded the demand (primarily from China and global economy slowdown), exerting indirect pressure on the Australian dollar. But now the situation has changed – one of the "three whales" of the market actually dropped out of the game, therefore the price of iron ore has increased dramatically. Demonstrates positive dynamics and copper, in response to positive signals from China.

Thus, the aud/usd has potential for further growth. On the daily chart, the pair is on the upper line of Bollinger Bands indicator and over all lines of the Ichimoku indicator: this shows the priority of the Northern movement. To determine the resistance level with a move on the weekly timeframe. As you can see, the strongest resistance level is at 0,7280 – at this price point in the upper line of Bollinger Bands indicator coincides with the lower boundary of the cloud, Kumo in W1. In other words, "Ozzy" has a 100-punkty the price gap for their growth, but at the approach of the pair to the level of 0,7280 will need to be careful with long positions.

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