Australian Dollar Turns Bullish on RBA’s Positive Outlook

Australian DollarThe Euro-Dollar has been declining since 25th October 2017 against its rival currencies. This downtrend began after ECB revealed its tapering plan, which includes continuing with the low-interest rate for an unknown time. The decline in Euro Dollar was further due to Catalan referendum.

On the other hand, the Australian Dollar has turned bullish because of the ongoing commodity rally.

The EUR/AUD pair has lost approximately 350 pips in the last two weeks and is now trading at 1.5100 levels. The currency pair is likely to the downtrend in the coming days, and the reason for same is discussed below.

The monetary policy meeting was held on Tuesday where the Reserve Bank of Australia had maintained the benchmark rate at 1.5 percent for the 15th consecutive month. RBA has also curtailed the rate of interest by 25 basis points once in August and May in 2016. The analysts were expecting the decision from the central bank of Australia. The Australian Dollar has become strong after the statement issued during the monetary policy meeting. In the coming five years, the Reserve Bank of Australia is speculating an economic growth rate of approximately 3 percent.

For the time being, there is a rally in the commodity prices due to some reasons. The Brent Crude, which affects the rate of LNG, has hit 2-year high figure of $64.64 per barrel on Tuesday. Similarly, iron ore with 62% Fe content has recorded a gain of 5.8% on Monday and is trading at $63.36 per ton. Coking coal, which is the raw material used in the steel industry has gained 2.5 percent and is trading around $180 per ton. LNG, coking coal and iron ore are three critical Australian commodities.

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There is a decline of 1.6% on the M-O-M basis in industrial production in September 2017 which is worse than 0.7 percent decline as expected by the analysts. There is a growth of 2.6% of industrial output in August.

It is to be noted that German, Italian and Spanish PMI (Purchase Manager Index) was below the expectation of the economist. Hence, we speculate the EUR/AUD currency pair to the downtrend in the coming time.

EURAUD Pair Nov 9th 2017

EURAUD Pair Nov 9th, 2017

The currency pair has crossed below 50-period moving average, and the momentum indicator is also moving below 100 reading which reveals the bearishness in EUR/AUD. Hence, the downtrend is likely to continue for some time in future.

To make a profit from the current downtrend, traders are suggested to BUY a Short Option in the currency pair near 1.5120 and place Stop Order above 1.5230. The profit order can be taken around 1.4980 where the next significant support level exists.

In the binary options market, traders are recommended to purchase a PUT Option with a validity period of 1 week. One should CLOSE the trade when the EUR/AUD pair is trading near 1.5120.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.

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