Current AUD Gold price view

My read of the gold price, specifically priced in AUD is;

while there are no extreme readings present either side of the pendulum,

the daily trend is turning bearish, albeit its embryonic, 

while the medium term upward trend is not under full steam.

This tells me that initiating long positions is merely participatory as the price is in ‘no-mans land’.

There is growing bias for lower prices in AUD priced Gold towards the A$2,420 level, which is approximately 9% lower than today’s A$2,650…..

however I’ll need to see certain support levels pierced in order to confirm any strength in a developing bearish trend.

While a move above A$2,690 begins to dilute this view.

December 16, 2022

by Rob Zdravevski

Ship out the Cattle herd

It’s time to lock in the selling price for your cows.

In other words, for sellers of Cattle, prices are now in the territory of being ‘good enough’.

In fact, beef farmers are looking at Cattle prices trading at ‘extremes’ not seen for a while.

The ‘circles’ in the ‘weekly based” chart below show prices coinciding at certain percentages above Cattle’s 200 week moving average, 2.5 standard deviations above a rolling weekly mean and registering a weekly Overbought RSI reading.

It’s advisable to ‘take the fat part of the trade’.

For Aussie, Canadian and Brazilian beef farmers who are receiving proceeds in USD, you’re in a particular purple patch whilst your currencies are trading at reasonable weakness.

Albeit, currency conversion is a seperate trade.

Specifically, for the AUD/USD, I think there is a good probability of seeing the AUD/USD trade below 63 cents again, in the near term.

October 27, 2022

by Rob Zdravevski

Aussie vs Canadian Loonie is nearly Oversold

A Weekly Oversold reading in the AUD/CAD signals a reasonable buying opportunity in the ASX 200

One hiccup occurred in September 2018 denoted by the red vertical line.

The AUD/CAD isn’t Oversold at the moment, nor is the ASX 200

October 17, 2022

by Rob Zdravevski

AUD/USD – it’s time

The next and perhaps last point for the AUD/USD in this last downward leg sits around 0.6210 (+/- 20 basis points)

The AUD/USD is entering a 5th moment of being Oversold in the past 8 years.

This can be paraphrased by saying we are in the vicinity and ‘it’s good enough’.

So, I’m selling some USD and buying AUD.

This currency low and pending reversal or reversion will also has have affect on assets such as Copper, Oil and Gold.

October 11, 2022

by Rob Zdravevski

Crude Oil and AUD/USD watch

3 days ago, I wrote that Oil needed a quick drop of ‘$2 or $3’ in order to extend some strength in oil’s current downtrend.

WTI Crude fell $4.75 on Friday, closing its trading week at $78.74

Equally, the AUD/USD exhibited expected weakness during Friday’s session. It closed at 0.6531.

So, I’ll watch for how the AUD/USD and WTI Crude symbiotically test their next respective levels of 0.6464 and $77.50, as neither ‘daily’ downtrends are confirming continuing strength.

Hint: probability is rising that we are at the tail-end (+/- 3%-6%) of the downdraft in both assets.

September 24, 2022

by Rob Zdravevski

The AUD/USD is nearing a low

On September 7, 2022, I dispensed comments to clients about my views on the AUD/USD.

I cited how perverse it was that the Aussie was strong versus the EUR, GBP and JPY….

while it continued to weaken against the USD.

This so called perverse scenario is because you don’t generally see AUD strength against other G-8 currencies whilst it inversely exhibits weakness against the USD.

Then, I thought it was appropriate for operational businesses (whether requiring to do so physically or for hedging purposes) is to…….

1) take your strong AUD and buy either GBP, EUR or JPY (the Aussie has since weakened 1.4% against these crosses)

but then…..

2) prepare to sell your strong USD and buy AUD 

Back then (Sept 7th), the AUDUSD was trading at 0.6717.

My advice said that it needs to trade below 0.6680 if it is to make a move to 0.6464.

But I noted that the AUD/USD is within the process of being in the lower quintile (the last legs) of the larger downtrend which commenced at 0.7600 in April 2022.

Now, I think it’s time to prepare for the 2nd piece of that previous commentary.

Overnight, the AUD/USD broke below the 0.6680 level mentioned.

At the time of writing it is now trading at 0.6590.

It has weakened 2.6% since September 7th, 2022.

The velocity of the downtrend is increasing, albeit slightly.

However we are nearing interim support of 0.6560

I still see the 0.6460 region as major support.

My work and probability suggests locking in hedges or actually Selling USD / Buying AUD around this 0.6580 – 0.6460 mark is prudent.

A visit to 0.6340 would be an outlier 4 standard deviation, only seen twice in the past 20 years.

  • not personal advice, see disclaimer

September 22, 2022

by Rob Zdravevski

The Case for Higher Equities, a Stronger USD and Weaker Commodities

The US 10’s are yielding 1.33% and the Aussie 10’s are 1.20%.

That spread (difference) between the US 10 Government Bond Yield and the Australian 10 Year equivalent is currently 0.13%.

But the figure doesn’t really matter, it’s the direction of the trend which is of greater importance.

As we see today………a rising trend (and when coupled with a break above a trend line) portends greener pastures for equity prices.

Below you will find a ‘close-up’ of a Weekly chart, highlighting the current ‘break-out’, while the 40 year chart (on a Monthly basis) illustrates a rising trend (of the spread) equating to an advancing S&P 500 (SPX), while a decline trend results in a lower or sideways travel.

A rising trend in this interest rate differential tend to also equate to a stronger US Dollar, which in turn means a weaker AUD.

Which…..also correlates to weaker commodity prices.

This is an indicator worth watching for your macro and longer term positioning.

Who would think we’d see a stronger US Dollar?

Rising yields on U.S. Treasuries will prolong the advance in the Dollar.

And rising interest rates add to debt servicing stress which can lead to Sovereign Debt pressure (there is no use calling it a crisis, until it becomes one) at which point the U.S. Dollar remains the currency of ‘last resort’.

This can lead to more buying of the U.S. Dollar.

See how this scenario can develop?

August 11, 2021

by Rob Zdravevski

Nat Gas may halve before it doubles again

Lately, I’ve been calling an interim top in Crude, highlighting extreme overboughts in Gasoline, Heating Oil and Distillates and a peak in the Australian Dollar.

Natural Gas has also touched some extreme overboughts where a Long trading exit target of $4.07 was hit.

Now, I think petroleum prices ease lower over the medium term while Natural Gas may nearly halve in price in the next 10 months or so.

Crude prices lead Natural Gas prices. Crude is down $12 since I made my recent ‘top’ call.

Below is picture of how I think it may play out.

You can see the resistance and supports it needs to test or break and this will help tell me if I’m wrong.

If the scenario below evolves, you’ll also see weaker (commodity) currencies such as the AUD and CAD while the U.S. Dollar strengthens.

August 9, 2021

by Rob Zdravevski

As goes Oil, so does the AUD

And as a follow up to the previous Brent Crude oil post,

the chart below may tell us what happens to the Australian Dollar compared to the U.S. Dollar…..

should Brent Crude decline

June 28, 2021

by Rob Zdravevski

Short term AUD FX range

During this week of October 5th-9th, if the AUDUSD stays under 0.7280 but breaks below 0.7030, then I’ll look for lower prices.

It’s 0.7168 as I write this.

Similarly, if the AUDJPY stays below 76.40 and breaks under 73.95 (it’s 75.68 at the moment), it will add weight for lower equity indices.

Incidentally, Bitcoin’s support level is ~ $10,320

Failure of these short-term support level should have mimicking effect on other asset classes.

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