The upward trend formed 3 years ago continues and is far from completion. This year, a real black streak has come for the AUD, and one negative factor is replacing another: the trade conflict between China and the United States, forest fires that cause irreparable environmental and economic damage, and now the coronavirus in China, which continues spreading and has already reached Australia. At the same time, the Australian economy has weakened under the influence of slowing economic growth in the world economy, which negatively affects the demand for raw materials.
This week, the AUD managed to gain a foothold given the RBA's decision to leave the interest rate unchanged, as well as China's decision to reduce duties on imports, which indicates an improvement in the relations between China and the United States. Still, the slowdown in economic growth and disappointing reports on China's economy, as well as news about the development of the epidemic, with a twofold increase in mortality from this virus, led to a decrease in the AUD against all major currencies, including the far-from-strong these days euro. Current macroeconomic reports from Australia were also disappointing. In particular, it became known that the trade surplus decreased in December and retail sales decreased despite the holiday period.
On this background, the euro looks much more preferable for investors because it is affected less by the coronavirus. Investors can also better assess the situation with the United Kingdom's exit from the EU, and the latest macroeconomic reports indicate an improvement in the economic situation in the eurozone.
In the future, we can't see any changes: the trend will continue, given that the coronavirus epidemic has not yet been stopped, and this will negatively affect the Chinese economy and China's demand for raw materials. The Australian economy will also be negatively affected by the effects of wildfires, which will force the RBA to take additional stimulus measures and ease monetary policy in the future. Therefore, the deals to BUY seem to be most effective in the long term. Technical analysis tools, including the Stochastic oscillator, also tend to deals on the trend.
