Market Update: Risk-off, has the AUD started a new move lower?

November 4, 2021
by Joseph Jeffriess, Market Analyst

Hi traders, today we’re focusing on the AUDUSD and AUDJPY charts in unison, as both charts are showing basically the same patterns.

The USD has made a strong move back at risk majors today. The GBP is also showing a similar pattern to the AUD but we have bypassed the GBP as the pattern could be disturbed by the upcoming bank of England rate statement and rate decision.

As mentioned, the USD has seen a solid return to favour today with the DXY index climbing back above 94.25. It’s been an interesting week for the USD so far with several swings.

The same can also be said for the AUD. The currency tumbled on Tuesday after the RBA meeting. Rates were held as expected but the shock came in the statement. For whatever reason, this RBA meeting was billed as a hot one. Expectations around our first-rate hike looked to the top of the agenda and that looks like the wind that was taken out of the AUD sails. The RBA commented that the first-rate hike may not occur until the current target bond matured, that’s in 2024. 2023 has been noted as acceptable but 2022 was ruled out.

With expectations shot down in the short-term we can see the reaction on the charts below. I’ve marketed the day (Cup Day), this decline is interesting as it reinforced resistance above and broke the current medium-term trend. Today’s session has also added more fuel to fire with a new LH after the trend break. I’ve seen these patterns over the years and they can be decent indications of momentum change. What we want to see now is further control from sellers closing price below yesterday’s low. This could further confirm seller control. If buyers can turn price and close above the LH point this would be a worry for seller control.

The other factor is the USD. Can it maintain its weekly advance? We have US employment data out tomorrow and recently it’s been a mixed bag. This data could also have a major influence on if this current bear pattern on the AUD can continue.

AUDUSD and AUDJPY Daily charts

All times are AEDT.