Aussie (AUD) Holds Parity–For Now!
The Australian dollar is considered one of the “riskiest” currencies out there as its place on the risk ladder is undeniable despite the fact that the Australian economy is pretty strong and rich with natural resources. The reason it is considered “risky” is because it is one of the most popular curencies for carry trades due to its liquidity and high interest rates.
So the Aussie trades primarily with “risk on, risk off” sentiment unless there is a major news item in Australia or in China, the largest importer of its goods.
Therefore, it is no surprise that the AUD/USD pair was lower on risk sentiment, but it looks like it held support just ahead of parity with USD and on its 50% fibonacci retracement level at 1.0025.
This morning’s bounce is contained by the 20-period moving average on the 4-hour chart so a close above that level at 1.0125 could mean a rebound up to 1.0250.
However, if we cannot close above that level and just above the 38.2% retracement level, then we could see declines below parity to 99.50 and possibly beyond. Shorter-term trends are clearly to the downside as risk aversion is more prevalent, though short-term buys ahead of support and short-term sells ahead of resistance could provide decent trades considering the uncertainty in global markets.