The AUDUSD pair has been on a consistent decline since January 2018. The US benchmark interest rate of 1.75% is now higher than the prevailing interest rates in Australia. Furthermore, Trump’s trade war with China and pressure on commodity prices are taking a toll on the Aussie. We expect the AUDUSD pair, which is currently trading at 0.7600, to decline further due to the reasons given below.
The price of seaborne coking coal fell sharply this week after two cargoes were sold in China at prices steeply lower than previously agreed levels. The premium coking coal was sold at $185 CFR China, representing a $10 decline from the price traded last week. Both cargoes were from Australia.
Likewise, the price of iron ore (62% fines) fell to $67 per tonne, down from about $85 per ton in early March. Other lower grade iron ores were also under tremendous selling pressure. 58% of fines were traded at about $39. Iron ore and coking coal are the two main export products of Australia.
In the US, the Conference Board Consumer Confidence Index rose to 128.7 in April, from 127.70 in March. Analysts had expected Consumer Confidence, to decline to 126. The survey is conducted by Nielsen for The Conference Board. The Expectation Index rose to 108.1 this month, from 106.20 last month. Likewise, the Present Situation Index improved to 159.6, from 158.1.
Another most sought-after data by traders, new home sales, was published by the Commerce Department on Tuesday. The report indicated that new home sales grew 4% to an annual rate of 694,000 units last month. The seasonally adjusted data were better than 625,000 units anticipated by economists. Furthermore, the Commerce Department upwardly revised February’s new home sales of 618,000 units to 667,000 units. January’s data were also revised to show unchanged sales, instead of declining. The upbeat data from the US is expected to keep the greenback bullish against the Aussie.
The AUDUSD pair is trading below its 50-day moving average. Furthermore, the currency pair faces major resistance at 0.7670. The next major support for the currency pair is only at 0.7430. The oscillator of the moving average is moving deeper into the negative territory. Therefore, we can expect the currency pair to remain bearish.
By going short in the AUDUSD pair, we are planning to gain from the probable decline. We prefer to establish a short trade near 0.7600, with a stop-loss order above 0.7690. Once the trade is opened, we would place an order to book a profit near 0.7450.
Additionally, in the binary market, we wish to buy a put option when the AUDUSD pair trades near 0.7600. We will choose an expiry date near May 4th for the options contract, while placing the order.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
