AUD Is Weak Under All-rounded Pressure

A rise in the wake of a fall was seen by DXY last week ascribed to the uncertain time of delisting caused by the Federal Reserve (Fed). However, the reason for the rally of DXY last Friday is the vigorous growth of personal consumption expenditures (PCE) released by the U.S. Bureau of Economic Analysis (BEA). In addition to this, the Fed should start to slow down its bond purchases by U.S. $120 billion this autumn, according to James Bullard, the president and CEO of the Federal Reserve Bank of St. Louis who has the right to vote. In his opinion, the Fed should “go fairly rapidly” in tapering the purchases. “I would have a target of finishing (quantitative easing, QE) by the end of the first quarter next year (of 2022),” added by Bullard. He also indicated that the way should be paved for interest-rate hikes to be carried out in 2022. His extremely hawkish speeches have boosted the performance of DXY to the greatest extent.

The financial market will concentrate on the unemployment rate and the non-farm payrolls (NFP) announced by the Bureau of Labor Statistics (BLS) this week. Optimistic expectations on these two statistics at present have led forex traders to insistence on the purchase of USD as a major trading tactic this week. Most of them regarded AUD as the main sale amid the previous week or so, a situation resulting from nothing but the weakest fundamental factors of AUD compared to its non-U.S. counterparts.

Fundamental factors in question include the escalating COVID-19 worldwide, the turmoil in the stock markets of Mainland China and Hong Kong, and the slightly sluggish economic recovery nationwide. In this case, traders focus on selling AUD. Apart from the AUD/USD pair, they also conduct AUD/JPY crosses as JPY has become a safe heaven currency on the volatile stock market in Asia. In addition, AUD/NZD crosses have also been carried out because the monetary policies of New Zealand have been tightened.

As for the three currency pairs above-mentioned, the profitability of AUD/NZD crosses is the highest. The AUD/JPY pair will be a lucrative trading tactic if the Asian stock market is continuously turbulent in the short run. Speaking of the AUD/USD pair, transactions can be fully operated when the monetary policies made by the Fed are totally hawkish.