THINKING OUT LOUD

A Weaker AUD

July 25, 2019
by Rob Zdravevski

The Australian Dollar Is Headed Lower

The best, clearest and most timely macro call I have at this moment is…..

the AUD goes lower versus the U.S. Dollar.

The Aussie remains in a downtrend over my short, medium and longer time periods.

My indicators are showing that these downtrends are strengthening and other key and complimenting signals are turning “lower” too.

In addition, the CRB (commodities) Index is entering its own new downtrends (across the three time periods mentioned earlier) which equally tend to move in sympathy with a decline in the “commodity currencies”

Other symbiotic observations suggest the Canadian Dollar and Euro are also at the early stages of entering new downtrends, understandably moving inversely to a stronger U.S. Dollar.

At the time of writing, the AUD/USD trading at 0.6970. A close near to or below 0.6960 over the next day will provide further confirmation that we’ll see the next leg of lower prices.

Where to Next ?

If the AUD fails to hold the 0.6850 level, then we are set to visit the 0.6650 – 0.6400 region.

The Opportunities…

Other than shorting the AUD, CAD, EUR, the CRB, selected commodities or being Long the USD …..the investment angle to ponder and take advantage of this view is could involve……..

……….Australian companies who produce notable revenue in U.S. Dollars though not commodities based,

………perhaps U.S. corporations looking to acquire businesses overseas (their higher valued stock and currency makes assets cheaper in the weaker currencies)

………or Industrials who will benefit from lower commodity prices for their manufactured products…

In my next edition, you’ll read my views on the various equity indices.

Until next time, 
Best Wishes, Rob