AUD/USD playing the bands

Relative calm continued to prevail in the FX space despite geopolitical risk remaining rampant.

AUD notes
Source: Bloomberg

I continue to watch AUD/USD quite closely as it maintains a tight range presumably waiting for a catalyst before the next move. AUD/USD remains subdued and relatively sidelined at 0.937. Glenn Stevens speaks at a luncheon this afternoon where analysts expect the Governor to pick up on some of the key themes that he’s touched on recently.

This includes the elevated AUD and some uncertainty about the extent to which a pick-up in non-mining activity will offset the decline in mining investment. We also have Assistant Governor Debelle participating in a panel discussion through the day. This is unlikely to carry as much weight as Stevens’ speech particularly heading into tomorrow’s CPI data.

Risk also focuses on Indonesia elections

Additionally the announcement of the Indonesian election results could be a source of volatility for risk should they not go as planned. The market expects the results to confirm Jokowi as Indonesia’s next president after securing 52.9% of votes. The baseline scenario is for a smooth transition but there has been loose talk of protests from the opposition should Jokowi be confirmed. Should this not come to fruition then perhaps some profit taking in the short term will be on the cards. Having said that, the Bollinger bands on AUD/USD remain intact and could continue to be used as a way of playing the pair.

The buy zone currently comes in at 0.9326 while the sell zone is at 0.9448. Should the pair trade at those levels, then I will assess stop levels depending on conditions and potential near term targets. When using this strategy, it’s always important to keep stops relatively tight given the trade is only valid if the bands continue to hold.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.