Australian Dollar Analysis and Talking Points
AUD/USD: Indecision for the Australian Dollar, which has traded within a relatively tight 0.7700-0.7820 range. AUD/USD continues to receive good demand from the 0.77 handle, which also coincides with the 100DMA. On the flip side, bears have looked to engage at 0.7800-20, therefore keeping the market poised for a breakout. That being said, it would take for a close above the March peak (0.7849) for a return to 0.80. Looking ahead to next week, Australian CPI will be the main domestic focus, where expectations are for a modest pick-up, much like in NZ. Elsewhere, the main focus on the economic calendar will be the Fed decision.
Aside from the economic calendar, the Aussie will continue to follow the ebb and flow of risk trends, which at present does appear to be rather fragile. Highly speculative assets such as Bitcoin have continued correct from its April peak, while more traditional risk assets such as the S&P 500 have also struggled on the topside in recent sessions. As such, this provides near term concerns for AUD/USD which may continue to have a tough time making a firm break above 0.7800. On the technical front, the pair does appear to be attempting to put in a head-and-shoulders pattern, where a close below 0.7562 would likely leave AUD/USD vulnerable to a move towards 0.74.
AUD/USD Chart: Daily Time Frame
AUD/USD HEAD AND SHOULDERS PATTERN
AUD/JPY: Speculative Assets Signal Lower Levels
Last week, I made a note about looking at risk-on barometers in FX (AUD/JPY) and comparing them relative to super speculative assets such as cryptocurrencies and in particular Bitcoin. Questioning whether Bitcoin could provide a leading signal for FX. For a link on that, click here.
Using Bitcoin as an indicator for AUD/JPY, would suggest that AUD/JPY may see further downside in the coming sessions with the current price of Bitcoin implying AUD/JPY at 83.00.
AUD/JPY vs Bitcoin