Risk Tells in the Currency and Bond Markets Pointing to Further Short-Term Downside
Expect a downtrend from now until October and then a rally into the end of the year.
The Aussie dollar is not retracing any moves, just fulfilling what appear to be bearish set-ups.
The daily chart of the Aussie dollar / US dollar currency cross (AUDUSD) is shown below. The AUDUSD appears to be in the early stages of a wave ((iii )) lower with a downside target of 1.00435 (from current levels of around 1.03624). That’s just the minimum short-term downside target. The bigger picture appears very bearish for the AUDUSD. My question is whether commodities and other risk assets will be displaying similar weakness. I’m not ready to make such a declaration at this point.
Click to enlarge
The chart below shows the Aussie dollar / Japanese yen cross (AUDJPY) on a daily basis going back to mid-2011. This cross also appears to be in a short-term third wave lower with a minimum downside target over 3,200 pips lower than current levels. It could be even worse than that in terms of the AUDJPY. The eventual downside target for the AUDJPY – after this downside, a sideways correction and one more shot to the downside play out – is all the way down at 70.944. That can’t be good for risk assets – especially commodities – can it?
Click to enlarge
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.