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Short AUD/USD (from 23 to 24 May)

Real-Time AmpGFX – Bought to close short AUD/USD, tactical retreat (Thu 5/24/2018 7:46 AM)

Bought half unit AUD/USD at .7570 to close short position

Comment

Into end week I see the greater risk if a retracement in USD strength in Europe developing, and lower US yields in the wake of the FOMC minutes, causing some broader retracement of USD strength.

The market has not responded as much as it might have to the latest tariff threat from the US.

This is a tactical retreat for the moment.

Real-Time AmpGFX – sold AUD/USD (Wednesday, May 23, 2018, 7:14 PM MT)

Sold half unit AUD/USD at 0.7554

Comment

AUD/USD has recovered from recent lows to reach around 0.7600; we view a good risk-reward trade is to sell with a stop above this level. (chart)

In the last week, the AUD has out-performed EM currencies and European currencies, which have fallen against the USD.  Weakness in these currencies against the USD may spill over to the AUD. (chart)

Iron ore, coal and steel price futures have fallen in recent sessions in China. (chart)

News suggests that Trump administration is planning to announce broad tariffs on autos.  This may not affect Australia directly, but may undermine investor confidence in Asia and Europe, weaken global growth confidence.

US economic reports continued to show strength this week, whereas Euro and Japan Flash PMIs were weaker than expected, and may tend to keep EUR weak, USD strong.

NKorea and US Summit in doubt may further add to global risk aversion.

US rates have eased, but the AUD yield advantage remains firmly below zero (chart).

 

Position

Short half unit AUD/USD at 0.7554; s/l  0.7627

 

 



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Greg Gibbs,
Founder, Analyst and PM
Amplifying Global FX Capital Pty Ltd