The upward trend, which was formed at the beginning of last year, continues. Recently the Australian dollar has become less attractive to investors for a number of reasons, including the unconvincing economic situation, the monetary policy of the RBA, and the likely trade war between the US and China, which also carries a risk for commodity currencies, including the AUD.
The central banks in Australia, Japan, and New Zealand adhere to an extremely soft monetary policy, which does not please investors. At their last meeting the RBA clearly stated that they are not going to raise the rate in the foreseeable future. This statement had a slight negative effect on the value of the AUD, because it was expected on the market, but looks a bit strange amid recent data on the economy of Australia.
The last two weeks for the EUR/AUD were quite intense. The euro strengthened significantly against major currencies based on results of the migration summit, but then retreated under the pressure of strong statistics from Australia and statistics from the eurozone, where economic growth is still slowing, despite achieving the inflation target. First of all, investors paid attention to the PMI manufacturing index, which showed a decrease for the sixth consecutive month. The decline in the index from 55.5 points in May to 54.9 points in June is the sharpest slowdown in the industrial sector since December 2016. This has led to a revision of forecasts for the future: investors expect a further slowdown in the growth rate of business activity to the level of November 2015. At the same time, the unemployment rate, according to the latest data, remains the lowest since 200 for the second month in a row, which is a positive signal for the EU economy.
Data about the trade balance of Australia allowed the Australian dollar to slightly strengthen today against the euro. In Australia we can see a trade surplus for the fifth month in a row. In May the surplus increased by 75% compared to the previous month, to 0.83 billion AUD. Investors expected a more significant surplus growth (1.2 billion) but it should be noted that exports and imports increased by 4% and 3%, respectively. Both indicators have reached record volumes, which is a very positive signal, given also that exports have grown more than imports, and this carries the perspective for a further increase in the trade surplus.
On the chart we can still see an uptrend with no signs of a reversal, but at the same time we see a loss of intensity. Most likely the peak has already been passed in March-April 2018. The MACD and Stochastic oscillators indicate the efficiency of short deals against the trend. It is difficult to say now whether this is the beginning of a new trend or the usual price correction, but in any case, at the moment the deals to SELL can be considered the most effective.
