The AUD/USD pair fell during the session on Friday, breaking clean below the 0.9250 level, an area that I had been calling for to get below in order to continue to selloff. Because of this, I feel that the Australian dollar will continue to grind down to the recent low that the 0.8950 level, but I do recognize that the 0.90 level will of course be a significant psychological support area.
Gold markets look a bit soft as well, and as a result could drag the Australian dollar down with it. After all, the two markets tend to run in tandem over the longer term, and with that being the case, I think that both of these markets will have to be watched. Also, the Federal Reserve will of course have an effect on the market also, as they may or may not taper off of quantitative easing.
Tapering off of QE?
The Federal Reserve will more than likely be monitoring the jobs market closely as the central bank has stated previously that they are concerned about employment in America as it has been so stubborn about picking up. This market is normally sensitive to the Fed, so I think this is going to be one of the markets that you may want to be in if the Fed does in fact taper. After all, the market could really sell off in that event. The real question is whether or not they can.
The commodity markets are a bit soft in general, and of course this will continue to weigh upon the Aussie. The market will continue to be volatile, but in general looks like it will fall overall. The 0.90 level will be targeted in my opinion, and a break of the lows from the Friday session sends this pair there, and has me shorting the Aussie for that move. I think the move could be rather quick, and as a result would probably be willing to take a larger position in this market than usual.
