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The Decline of AUDUSD

jeffriess
March 18, 2020
by Joseph Jeffriess, Market Analyst

The weekly chart shows just how far AUDUSD has come down.

Looking at AUDUSD over the last three months we’ve seen a 15% drop, but the current fast decline is only a small part of the overall fall that’s been running since 2010 when the currency pair was trading above 1.1000 USD.

From the weekly chart below we can see just how amazing this decline has been. There are a few factors to the fall, interest rates being one as the US increased, while we remained low. The carry trade was another factor helping AUD run-up in 2008, combined with the resources boom, which turned to USD favour as Federal Reserve raised rates above ours, driving a carry back to USD and out of AUD. This changed recently after the Federal Reserve cut rates back to 0.

This week AUDUSD fell below the low last seen during the global financial crisis, its lowest point in 17 years. I can still remember back to the early 2000s when AUDUSD hit it’s .4814 low. With this crisis really just starting globally and with no real way to know or forecast the exact time or impact we’re all going to face could we see a new move back below 50 US cents for AUDUSD? Check out the AUDUSD monthly chart below the weekly, what do you think? Can you see a move back to or below 50 US cents?

This is all guesswork but you can’t deny the potential impact on just about every sector going forward and the impact on global growth. Rates you would think won’t be an influence, as most central banks will be at 0 or below the AUDUS.

AUDUSD Weekly Chart

AUDUSD Monthly Chart 

Charts – Netdania

Good trading from Eightcap.
All times are AEDT.