The downward trend continues. At the same time, since August we have seen a loss of intensity, due to the weakening of the USD. It should also be noted that the support line has been repeatedly tested in the last months, and at the same time remains at multi-year lows. The Australian dollar was cheaper only until 2003.
This week, both currencies have weakened. The level of optimism on the market fell significantly, and the Australian dollar was under pressure by the RBA's decision to reduce the rate to 0.75. This is the third decrease this year, and now, in comparison with last year, the rate is exactly twice less. At the same time, it is unknown whether this decrease is the last one, given that economic indicators continue to deteriorate in Australia. In particular, this week we learned there was a drop in exports by 3% in August, so the trade surplus decreased. Thus, the slowdown in the global economy, and especially in China, has a direct negative impact on the Australian economy.
By the end of the week, the USD was under even more pressure, although in this period of time, the dollar has seasonally strengthened due to the beginning of the period of sales and consumer activity. This week's reports showed a widespread deterioration in economic indicators. In particular, there was an increase in the number of applications for unemployment benefits, higher than forecasted, a decrease in the number of employees in the non-agricultural sector, and a decline in business activity in the services sector in September. Such data motivated investors to shun investments in risky assets.
At the moment, we can see signs of the formation of a flat trend in the range of 0.6680-0.6895 USD. Next week, commodity currencies may gain support with the start of a new round of negotiations between China and the US. Also, the Australian dollar may receive support if new reports on business activity in China and the trade balance meet the forecasts. We believe that in the near future, the USD will not have enough incentives for a further strengthening against the AUD, with the achievement of new lows. Therefore, in the short term, the deals to BUY will be the most effective.
