In the financial business it’s hard to make predictions, especially about the future, but the writing is clearly on the wall for the Australian dollar.
The Pacific Peso continues to be an innocent (sic) victim of the growing trade war between China and America. We’ve one hand clinging to the red apron, the other on the red white and blue – although it resembles more and more a baby’s bib.
Wednesday night saw the culmination of a selloff that has accelerated since a false breakout from a low late last week with the Aussie falling below 74 cents against USD to a new weekly and monthly low:
But it also sank against Yen, coming up to a key support level below 80:
As the beleagured Euro – now doomed to at least tweleve months of no rate rises according to the ECB – also strengthens, with the daily chart signalling an inflection as the EURAUD cross comes up against the 1.58 level, signalling further highs:
With only Pound Sterling providing modest support against the Aussie, with the GBPAUD relatively stable here at 1.79, after rallying from the Brexit imbued correction against all currencies from the start of the year.
While the weakness against the crosses is fairly obvious, it’s stark when compared against King Dollar. This is where the market is signalling the death of the Aussie. The 70 cent level is clearly the next target below, with the monthly chart signalling a massive bear flag pattern. If filled, the next technical support level suggests a return to the GFC low at 63 cents or lower.
In technical signals terms, the Aussie dollar is finished.
The MB Fund which is over-weight global equities that benefit from a weaker AUD. The first option is to use the MB Fund International Stocks Portfolio which is always 100% long as a part of your own asset allocation mix. The second option is to use an MB Fund tactical allocation in which we choose the asset mix for you, including exclusively international stocks, but with bonds and other assets as well to ensure a more conservative mix.
The recent performance of both is below:
If these themes interest you then contact us below.
The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance.