by Chris Becker
The Australian dollar is no longer the market darling, even with iron ore and steel prices on the move higher, as the commodity currency is showing how weak and fragile the underlying economy it supports really is.
Looking at weekly charts to discern the medium to long-term weight that the market places on the Pacific Peso is quite illustrative, particularly when looking further afield at the crosses.
It’s painfully obvious that the Pacific Peso is struggling against the USD:
This multi week downtrend against USD after twice hitting the 80 cent level has leveled the Aussie back down to terminal support at 73 cents, a two year plus low. While price has decelerated into this support in the last month or so, the future is not bright given the interest rate differential:
The weakness spreads to the other major pairs with the Yen also at a two year high, keeping the AUDJPY pair depressed between 80 and 84 (not good timing for those buying goods overseas with the GST hike too!):
Or with the beleagured Euro, as the ECB seems to be the only central bank left with “easy as she goes” on their collective Brussel minds. The EURAUD pair continues to power ahead, with 1.60 reached earlier in the year and likely to be met again as the relatively narrow trend channel continues ever higher. Again, not a good time to be shopping in Milan:
Although London looks a little better as the Brexit divisor continues to disrupt the former Motherland. But still elevated and still showing how weak the Aussie is against, well everything:
Even the Kiwis are catching up with a bearish rising wedge now forming on the weekly chart after the AUDNZD failed to make a new high for the year (note the low at 1.05ish when I went on holiday to NZ…Becker Currency Indicator works 100% of the time):
And even against our sorry Northern American commodity brothers, the Loonie is pushing to make a triple bearish bottom pattern here at the 96 level, ready to breakdown to the 2016 lows at 93 or below:
Short Australian dollar may look like a crowded trade, but the factors are all lining up against the currency as the economy shows its true colours.