Forex Analytics from LiteForex of 08.11.10: AUD: Australian Dollar goes down; the pair is under correction

At the Forex currency market the Australian Dollar rate goes down on Monday after seven consecutive days of ascending trend.

Forex forecast: MACD indicator is in the positive area for the pair AUD/USD, however it goes down giving grounds for a pair sell signal. Stochastic Oscillator is giving a similar signal today, being in the neutral zone.

Forex recommendations: in case of breakdown at the level of 1.0080 traders’ targets will be the levels of 1.0050 and 1.0010.

The state of things can be different: the pair continues to be above the parity level; however such movement will not be very pronounced. Australian news was not published today; external background is mixed and the pair AUD/USD looks overheated due to which corrective decline seems relevant.
A week earlier the Reserve Bank of Australia unexpectedly decided to raise the interest rate to the level of 4.75% per annum against the previous level of 4.5%, which was a surprise to the market. The regulator noted in the comments that country’s economy is vulnerable to external influence and has too little spare capacity. The risks of inflation still remain and it will make sense to proceed with policy tightening more actively.

The catalyst for such decision came from the outside: according to the International Monetary Fund, the Reserve Bank of Australian shall raise interest rates as the inflation should be chilled out and the outlook risks should be reduced. As the IMF report stated the regulator agreed that if the downside risks will be reduced, the policy of the rates will dictate their growth. IMF believes that the Australian economy looks quite strong due to the demand in iron ore from China. The IMF report also stressed that the AUD rate seems overrated by 5-15%.

On Friday AUD has again reached the 28-year high, coming up to the level of 1.0183 amid investors’ interest in risk and demand from the Middle East investors.
 

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