- The Australian dollar has fallen significantly during the trading session on Friday, as we have seen a lot of risk appetite taken out of the market, with a whole host of issues out there having people concerned about the global economy.
- After all, we are looking at a situation where tariffs are probably going to be a major concern, and we also have a situation where China the United States will probably continue to trade tariffs.
- If that’s going to be the case, it has a direct influence on the Australian economy.
Inflation
The inflation numbers in the United States came out a little bit mixed during the trading session, but the PMI numbers certainly show that we still have expansion in America, and that should continue to drive inflation higher. Furthermore, we also have to keep in mind that there are a lot of concerns out there when it comes to whether or not Canada in the United States can come together with some type of agreement. While things have moved in the right direction, it’s a bit of a stretch to think that perhaps it’s moved quick enough for Donald Trump.
If that does in fact end up being the case, it will almost certainly have a major influence on commodities overall, which of course has a major influence on the Australian dollar. That being said, we do have the 50 Day EMA sitting underneath, right around the 0.63 level. If we were to break down below there, then the Australian dollar probably plunges quite drastically.
Recently, we have seen the US dollar give us some of its strength, but I think this is a short-lived phenomenon, and I think we are starting to see the longer term outlook for the global economy come back into the picture. Because of this, I am still a little leery of trying to buy the Australian dollar, and therefore I think this breakdown could present a nice selling opportunity if we can break down below the bottom of the candlestick for the Thursday session.
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