Invast’s most recent discussion with CNBC
We wrote about the resilience of the Australian economy last week, highlighting to fact that economic data has been much stronger than what many had expected. The past week has seen the Australian dollar much strong against the US dollar as the market starts to reprice forward rate assumptions.
With that in mind, we were invited back to CNBC studios this week to discuss Asian markets and the implications of the Federal Reserve’s dilemma (link) – how to lift rates while the economic picture is still unconvincing. During the discussion, we explained that the Fed must maintain its credibility and push through another rate rise, while buying time to ensure that the economic data confirms this stance. We don’t feel that the Fed will abandon its recent hiking stance, but as we saw in 2015, it will take all the time it needs before adjusting rates.
This makes the case for the Australian dollar interesting. In the short-term, the Aussie is likely to find strength in the absence of US rate movements. But when the Fed does move, the Aussie will find it difficult to hang onto its gains. Commodity prices remain depressed and it doesn’t look like they are about to break out of their recent downward. That is very important to keep in mind, an Aussie dollar rally in the absence of higher commodity prices is very vulnerable.
So while we don’t necessarily see the Aussie collapsing anytime soon, we would be inclined to sell the recent rally in the absence of any commodity price movements. The technical indicators bode well for the Aussie dollar, but there will be a lot of stiff resistance as it attempts to move higher. These will provide good short selling opportunities.
I have written to Invast clients this week advising them of how to trade the Aussie dollar in the next few weeks. Clients will get access and pinpoint entry and exit points, like my call on ANZ earlier this month where we saw a short term rally opportunity then advised clients to take profit right before the share price came back.
These insights are invaluable, make sure you get access to them.
Remember, Invast clients get a higher level of research and analysis, including weekly trading calls written by myself and other members of our investment committee. I invite you to get access to these by joining as a client. You can self-navigate through our simplified account opening process here.
Chief Market Analyst
Peter Esho is a member of Invast’s Investment Committee and Chief Market Analyst at Invast Financial Services in Australia. The Invast’s Investment Committee constructs professionally constructed global thematic portfolios of Direct Market Access (DMA) CFDs over highly liquid global shares and ETFs through its new PortfolioInvestor platform. Since 1960, the Invast Group has grown to become one of the largest and most successful global brokerage firms, offering state-of-the-art trading technology and unparalleled service catering to all levels of traders.
Invast Financial Services Pty Ltd (ABN 48 162 400 035) is regulated by the Australian Securities and Investments Commission and holds an AFS Licence 438283 which authorises it to carry on a financial services business in Australia.