The AUD/USD pair fell again during the session on Thursday, breaking the bottom of the Wednesday hammer which of course is a very bearish sign. Because of this, the market raced towards the 0.98 level, an area that has been significant support in the past. That wasn't much of a surprise to me, once we broke the bottom of the hammer that really was nowhere else for this market ago at that point.
However, 0.98 level could provide a little bit of a bounce. Quite frankly, I hope it does as it will simply give us the opportunity to sell the Australian dollar at a higher rate. This currency is obviously broken at the moment, and it appears that he could go much, much lower. Part of this is because of the slowdown in China, which of course Australia is heavily leveraged to. The Reserve Bank of Australia has even suggested that further rate cuts are in the pipeline, and if that's the case there is aptly no reason to believe that the Australian dollar will be strong overall.
Pay attention to America as well
On the other side of this equation, you do have the US dollar which is picking up steam and gaining strength overall. This isn't just an anti-Aussie dollar story, rather it is a pro-US dollar story as well. Most traders will forget that, as they are conditioned to simply sell the US dollar and choose which currency to buy against it.
There is real strength in America at the moment, as it is one of the few economies around the world that seems to be doing fairly well. Also, let us not forget that the United States is rapidly becoming a petroleum and natural gas exporter, tipping the scales of the commodity equation. While the Americans don't necessarily export a lot of precious metals, quite frankly the energy sector will get the much farther than the Aussies and their copper and gold mines. I'm not suggesting that this is a cyclical downturn and that the Australian dollar will be much weaker over the next several years, just simply that there are other things to think about now.
