This is a quick update on the Aud / Usd dollar traders, today in the Monetary Policy Meeting Minutes that there most likely will be a rate cut next month in May. This is because of the recent bout of negative news in production, manufacturing and housing results while also combining the detrimental effects of the negative news of late on the slowdown in China.
To me, what i would expect from the Aussie dollar is to continue on its up down pattern between the strong support of 1.0250 and 1.0350 area. This area will be the major trading area unless some major good news comes out of China which could happen so keep an eye on that however to the down side is most likely due to the pressure these slowdowns are causing on the Aussie economy of late.
Another aspect of late is the slow growth results coming out of US, while the US is recovering slowly, they are recovery so expecting the Aussie to go back to levels higher than 1.07 would need a major news such as another round of QE or something similar. This at the moment is highly unlikely and the fed believes it will not be needed as well. While all this news is not set in stone, these results to me point the Aussie to a fresh view of a down cycle with a good place to buy being at 1.0250 and selling above 1.04..
What to do if a Rate Cut Happens?
So what to expect if a Rate Cut happens next month in May, well don’t put all your eggs in one basket. If the news is a rate cut then i feel the Aud against the US will drop back to its previous daily low of 1 dollar par or lower. If however the rate cut does not happen then expect little change. Then on the opposite scale, if a rate rise happens which is highly unlikely then expect 1.0450 to 1.0550 again..
Good luck to all you Aussie traders out there. The Aussies current rate as I write this at 1.0330 area and dropping with a low Indice strength value of 3.