ForexEzy
No Result
View All Result
  • Home
  • Getting Started with Forex
  • Forex Education
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
  • Top Forex Brokers
  • Top Forex Robots
  • Commentary
  • Blog
  • Home
  • Getting Started with Forex
  • Forex Education
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
  • Top Forex Brokers
  • Top Forex Robots
  • Commentary
  • Blog
No Result
View All Result
ForexEzy
No Result
View All Result
Home Forex Market Commentary

AUD/USD: Here’s Why the Aussie Has Ended 2020 at a Multi-Year High

by Adam Stanley
January 8, 2021
in Forex Market Commentary
0
AUD/USD: Here’s Why the Aussie Has Ended 2020 at a Multi-Year High
0
SHARES
11
VIEWS
Share on FacebookShare on Twitter
  • The AUD/USD pair has rallied substantially this year.
  • This is because of the strong Chinese economy, higher commodity prices, and a weaker dollar.
  • Will this trend continue in the coming year?

The Australian dollar is on track for its best annual performance in a decade boosted by a weaker US dollar, resurgence of the Chinese economy, higher commodity prices, and the overall handling of the coronavirus pandemic. The AUD/USD has soared by more than 10% this year and by 40% from its year-to-date low of 0.5500.

Robust China economy

The Australian dollar is often viewed as a proxy for the Chinese economy. That’s because China buys more than a third of all Australia’s exports. It is also a vital consumer of Australia’s services, like education and entertainment.

While China was the source of the coronavirus, the country managed to handle it well. It only recorded less than 100,000 cases and a few thousand deaths. That was remarkable, considering that China has a population of more than 1 billion people.

Therefore, after tumbling in the first quarter, the Chinese economy bounced back by 3.2% in the second quarter. It then soared by a remarkable 5.2% in the third quarter. And the government expects an annual increase of about 6.0% in 2020. This is a significant feat considering that the overall global economy will decline by about 3% this year, according to the IMF and the World Bank.

A resurgent Chinese economy boosted commodity prices. Indeed, as shown below, the Bloomberg Commodities Index (BCOM) managed to bounce by more than 30% from the YTD low of $59.52 in March to $77 in December. In the investment world, the Australian dollar is viewed as a proxy for commodities because of the vast amount of raw materials the country ships.

Bloomberg Commodities Index

Bloomberg Commodities Index

A resurgent China and higher commodities prices made the Australian economy do better than its peers. For example, in the second quarter of the year, the Australian economy declined by 7.2%. In contrast, the American and European economies contracted by more than 20% during this period. The economy later rebounded by 3.3% in the third quarter.

Weaker dollar in play

The AUD/USD pair also soared because of the overall weaker US dollar. The closely-watched dollar index (DXY) declined by more than 7% in 2020. Indeed, the currency fell against all currencies in the G10 and most emerging market currencies.

dollar index (DXY) chart

This happened because of the Federal Reserve, which unleashed its biggest liquidity ever. It lowered interest rates to zero and launched an ambitious open-ended quantitative easing policy. This QE led it to print trillions of dollars, which pushed its balance sheet to more than $7.7 trillion. 

Meanwhile, in Australia, the Reserve Bank of Australia (RBA) also unveiled its coronavirus defense strategy. It lowered interest rates to an all-time low and announced a QE program. Also, it signaled its willingness to push interest rates negative for the first time. This will possibly not happen because of the overall recovery of the economy. 

AUD/USD technical outlook

On the daily chart, we see that the AUD/USD price has been on a steady upward trend in the past few months. It is now at the highest level since April 2018. Subsequently, it has moved above the 50-day and 25-day exponential moving averages (EMAs). 

The Relative Strength Index (RSI) is also hovering near the overbought level of 70. Notably, the pair is above the important support level of 0.7412. 

Therefore, while the pair will continue rising, there is a possibility that it will go through a pullback. If this happens, the level to watch will be the August high at 0.7412.

ShareTweet
Previous Post

NZD/USD is in Overbought Zone – Is a Pullback in Play in 2021?

Next Post

Trading Strategies of the Investment Gurus

Related Posts

Dollar, Euro, Yuan Struggle As Pound Shines

Dollar, Euro, Yuan Struggle As Pound Shines

by Chintan Patel
January 22, 2021
0

Prospects of the Biden administration printing more dollars cause some traders to avoid the greenback.Euro comes under pressure as the...

USD/MXN Could Fall Further if Biden Stimulus Passes

USD/MXN Could Fall Further if Biden Stimulus Passes

by Chintan Patel
January 21, 2021
0

The USD/MXN pair has been in a sharp decline in the past few months.It has been helped by the higher...

Why the Yuan is on a Steady Balancing Act

Why the Yuan is on a Steady Balancing Act

by Tim Baudin
January 20, 2021
0

The Chinese Yuan currency has gained more than 5% YoY against the dollar.China’s CPI rose by 0.7%, and the PPI...

USD/CHF: The Dollar’s Recovery Pegged on Biden’s Stimulus

USD/CHF: The Dollar’s Recovery Pegged on Biden’s Stimulus

by Richard Brase
January 20, 2021
0

The USD/CHF currency pair has decreased by almost 13% since April 2019.The dollar is expected to react positively against the...

Gold Price: Not Yet the Golden ERA

Gold Price: Not Yet the Golden ERA

by Adam Stanley
January 20, 2021
0

The gold price has found support at the $1,850 mark sparking fears that the golden moment is far from reach.The...

Load More

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Best Forex EA

  • ROFX 9/10
  • Forex Fury 8/10
  • FXgoodway 7.5/10
  • Z Trader FX EA 7/10
  • Forex Incontrol Reborn 6.5/10

Popular News

  • The Best RSI and CCI Combination Trading Strategy for Optimum Returns

    The Best RSI and CCI Combination Trading Strategy for Optimum Returns

    2 shares
    Share 2 Tweet 0
  • Rofx Review – High Profitability and Stable Performance Analysis

    29 shares
    Share 29 Tweet 0
  • The Best Forex Scalping Strategy – Using 3 Popular Technical Indicators

    0 shares
    Share 0 Tweet 0
  • The Best MT4 Indicators & Expert Advisors For Forex Trading

    2 shares
    Share 2 Tweet 0
  • How to check if the indicator is repainting?

    2 shares
    Share 2 Tweet 0

Trading

Footer

We are dedicated to demystify the world of forex trading for you – no matter what level you are on.

Categories
  • Automated Trading
  • Day Trading
  • Forex Basics
  • Forex Brokers
  • Forex Education
  • Forex Forecasts
  • Forex Indicators
  • Forex Market Commentary
  • Forex Robots
  • Forex Signals
  • Forex Tools
  • Forex Trading Strategies
  • Fundamental Analysis
  • Money Management
  • News
  • Risk Management
  • Social Trading
  • Technical Analysis
  • Top World Traders
  • Trading Psychology
  • Uncategorized
Tags
arbitrage atr bollinger bands cci chart patterns classics copy trading courses day trading forex brokers forex charts forex ea forex education forex forecasting Forex Indicators forex software reviews grid trading hedging ichimoku macd market cycles news trading oscillators price action trading rsi social trading strategies tips & tricks trading bots trading platforms trend trading Video
  • Terms of Use
  • Privacy Policy
  • Compensation Disclosure
  • Risk Disclosure
  • About Us
  • Contact Us

Copyright © 2020 by ForexEzy.com

No Result
View All Result
  • Home
  • Getting Started with Forex
  • Forex Education
    • Forex Basics
    • Forex Trading Strategies
    • Money Management
    • Risk Management
    • Technical Analysis
    • Fundamental Analysis
    • Trading Psychology
    • Social Trading
    • Automated Trading
  • Forex Tools
    • Forex Robots
    • Forex Indicators
    • Forex Signals
  • Top Forex Brokers
  • Top Forex Robots
  • Commentary
  • Blog

© 2020, Forexezy.