G’day mates! I hate to say “I told you so” but Mr. Aussie followed my prediction and reached our target of 0.78 end of April. However there are new developments around the world and we may need to revise our AUDUSD forex trading strategies May 2016. Make sure you have checked your financial health before getting tempted to trade this naughty currency pair from the Land Down Under.
AUDUSD Forex Trading Strategies May 2016 | Mr. Aussie and Ms. USA Dancing on the Forex Dance Floor
1- Australia’s Economy
Here are key points which hammered Mr. Aussie and has helped with developing the AUDUSD forex trading strategies May 2016:
Reserve Bank of Australia cut rates from 2.0 percent to 1.75%: Our mates in the land down under have been moving and shaking, unlike other central banks who seem to be all talk! The Reserve Bank of Australia (RBA) pulled the trigger on interest rates on May 3rd. Although many analysts saw it coming, the trading crowd hammered the rising Mr. Aussie as he danced against his major forex partners, including Ms. USA. According to the monetary policy statement by Mr. Stevens, inflationary pressures were the main reason why the cut rates.
Global Economy is Still Kinda Scary for the Aussies: Australia is heavily dependent on its trade activity. That’s why the well-being of the global economy has a strong impact on the demand for its commodity products. The RBA acknowledged that global growth forecasts have been revised a little lower recently but also noted that sentiment in financial markets has improved.When it comes Australia’s trading buddy China, policymakers confirmed that the PBOC’s efforts are starting to pay off, resulting in moderate growth in the world’s second largest economy. Still, RBA officials warned that “conditions have become more difficult for a number of emerging market economies” and “uncertainty about the global economic outlook” remains.
Moving the Economy’s Dependency Away from Mining Sector: RBA policymakers assessed that Australia is still in the middle of re-balancing its domestic economy away from a mining-led investments to non-mining activity.
Growth Continues, but Maybe at a More Moderate Pace: Australia’s GDP picked up over 2015, particularly in the second half of the year. Their labor market also improved. These indicate that growth is continuing in 2016, though probably at a more moderate pace. The statement mentioned that labor market indicators have been more mixed of late. For the month of March, most of the gains were seen in part-time hiring while productivity and earnings fell.
RBA Ain’t Happy with Strong Mr. Aussie: Just as he did in the last few statements, Governor Stevens reiterated that an appreciating exchange rate could complicate all the adjustments being made in the Australian economy. He explained that a low exchange rate has supported the trade sector. On the bright side, Stevens didn’t threaten to intervene in the forex market to limit Mr. Aussie’s gains. As we witnessed, the RBA rate cut already did all that work for them.
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