The upward trend has continued in favor of the Euro for more than a year. What is this connected with? Why is the Euro stronger than the Australian Dollar despite relatively equal monetary policy and despite all the economic and geopolitical problems in Europe? - We'll find the answers in today's review.
In fact, the weakness of the AUD is natural against the backdrop of growing threats to the global economy, as well as against the backdrop of a slowdown in the Chinese economy to unprecedented levels, because business activity remains at very low values for China, around 50 pips, exports and imports are declining, and thus we can see decreased a surplus in China's trade balance. All this creates a negative background for the Australian dollar, to which is added the rise in prices for oil, which Australia imports, which is reflected in inflation.
This week, the Australian dollar managed to strengthen against the euro after the ECB raised rates, but said that this was the last increase. Reports of a surplus of 6.5 billion against last year's trade deficit were overshadowed. The Australian dollar is also supported by continued optimism on the market despite rising prices. The Chinese government's measures to stimulate the economy are reassuring investors, as this is already having a positive effect on business activity and production growth. Also, a good employment report in Australia adds confidence to the AUD.
Most technical analysis tools show us perspective of further strengthening of the Australian dollar. After the ECB put an end to the interest rate rally, speculation on this topic can be considered completed for the time. On the other hand, the stimulation of the Chinese economy suits investors at the moment. We also note that the stock hit a multi-year high in late August before turning sharply lower without a period of consolidation, which could be a sign of a trend reversal. Therefore, today, while the rates are still near their highs, the deals to SELL will be as effective as possible.