The Australian dollar might make a comeback against the USD this week. Australian forex brokers are keeping a close eye on Chinese industrial profits to assess AUD’s movements. The profits will be broadcast at 1:30 GMT, deciding AUD’s short-term future.
The industrial sector has witnessed gradual recovery with pricing advantages and domestic consumption for five straight months. Even July offered a 57.3% growth on a year-to-year basis. Traders are predicting a growth in the AUD/USD index depending on the August numbers.
China is currently Australia’s biggest partner when it comes to trading volume. This is why AUD experiences substantial fluctuations depending on the Chinese industry’s performance. However, the Australian dollar might face additional risks despite a profit in China’s industrial profits.
Its treasury yields grew recently after the Fed announced its decision on rates. It resulted in traders quickly selling government debt as the Federal Reserve closed the gap on balance sheet tapering. As a result, even the standard 10-year note’s yields increased to the highest point since June.
The community expects the US dollar to continue its growth throughout the week. As for the AUD/USD, the index is trading above two trendlines. One of the trendlines is formed due to the performance in July, while early September trends form the other.
The index may trigger a rally for the week if it stays above the stage. However, a slippage below the level means immense losses. The currently falling 26-day EMA (exponential moving average) acts as resistance after recently moving upward price. Moreover, both MACD and RSI are currently neutral.
Thus, it is safe to state that the AUD/USD index is highly volatile for now. Therefore, forex traders must be cautious as even a slight slippage can render huge losses.