The downward trend driven by the trade conflict between the US and China, as well as by the economic downturn in Australia, continues. Despite the weakening of the trend in August, there is every reason to expect an increase in volatility and a further continuation of the downtrend.
This week the AUD continued its decrease against major currencies and reached the lowest level in 10 years against the USD. Investors this week are increasingly inclined to deal with safe assets, given the introduction of new duties on goods from China on Sunday and the lack of prospects of ending the conflict in the foreseeable future. At the same time, commodity currencies were also weakened.
Furthermore, macroeconomic statistics from Australia put pressure on the value of the AUD. As it became known this week, the volume of private investment in the second quarter decreased by 0.5%, while a growth of 0.5% was expected. Reports on the construction sector were also negative. In particular, the volume of completed construction works decreased by 3.8%, although according to forecasts, they should have decreased 4 times less. The number of construction permits decreased by 9.7% in July, when a deterioration in the situation in the construction sector was not predicted at all. All this increases the already high chances of a further reduction of the rate before the end of the year.
As for the economic situation in the United States, it is certainly more convincing, and despite the expectations of economists for the beginning of a recession, at the moment, we can periodically observe an improvement in economic indicators. In particular, the deficit of foreign trade in goods decreased more than expected and the GDP is in line with the forecast. The consumer confidence index in August was 135.1 points, which is also good.
In this situation, we believe that the deals to SELL will be the most effective in the medium term. Most technical analysis tools, including the Stochastic oscillator, signal the expediency of the deals on the trend.
