Home Forex The Aussie made hedge funds capitulate. Forecast as of 18.11.2022

The Aussie made hedge funds capitulate. Forecast as of 18.11.2022

by ForexGuy
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A new trend was born. AUDUSD The bear market crashed after US inflation data was released. Hedge fund surrender highlights Australian dollar trump card. And there are many of them. Let’s discuss it and come up with a trading plan.

Australian Dollar Weekly Fundamental Forecast

A downtrend usually starts to break after a slight compression. Hedge funds had racked up net shorts in the Australian dollar to an eight-month peak before shocking US inflation reports were released. AUDUSDHiking to the top since mid-September. The pair easily reached the 0.656 and 0.663 targets outlined in the previous article and are optimistic about the future.

In addition to rising risk appetite, Australia is supported by hopes of an early full restart of the Chinese economy, rising iron ore prices and strong Australian macro data. October saw some pleasant surprises in the Australian labor market. The unemployment rate dropped to her 3.4%, the lowest since 1974. Meanwhile, the number of jobs increased by 32,200 from her, doubling Bloomberg’s forecast.

Australian Labor Market and RBA Rates

Source: Bloomberg.

This information raises the possibility of a soft landing and higher interest rates for the RBA. It is now expected to rise 25 bp to 3.1% in December. At the same time, Citigroup expects cash rates to rise well above his 3.35% in 2023.

According to National Australia Bank, the RBA’s snail pace will help it emerge victorious against the Fed’s pause in the first quarter. as a result, AUDUSD Next year it will go up to 0.7. This forecast is higher than Bloomberg’s consensus forecast of 0.69 at the end of 2023.

Central bank interest rate trends

Source: Bloomberg.

The RBA’s latest meeting minutes reveal that the bank has no intention of stopping. Based on the situation, regulators are ready to suspend financial regulation or raise cash rates by 50 bp.

of AUDUSD It is inspired by hopes that China will abandon its COVID-Zero policy and China’s import tariffs will be lowered after Australian Prime Minister Anthony Norman Albanese and Chinese President Xi Jinping met at the G20.

Australia’s main export commodity, iron ore futures, has recovered from years of lows, which is also supporting Australia. Kpler forecasts that China’s ore imports in November will rise from 94.98 million tonnes to 96.87 million tonnes.

weekly trading plans AUDUSD

So, the Australian dollar has many aces, but in the first place, AUDUSDFurther moves in will be influenced by market sentiment and US inflation talks. The pair could continue to move higher if US inflation continues to decelerate past its peak. So in the medium term you can start buying the pair at the retracement of 0.655-0.657 or go long by breaking out the resistance at 0.675 and switch off your short term strategy of selling Australia if it breaks below 0.664.

AUDUSD price chart in real time mode

The content of this article reflects the opinions of the author and does not necessarily reflect the official views of Right Finance. The material on this page is provided for informational purposes only and should not be considered as providing investment advice for the purposes of Directive 2004/39/EC.

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