AUD/USD essentially at a 10-year low
At one point today, it looks like we had a bounce in AUD/USD. At this point, I'd settle for a dead-cat bounce but as it stands, this thing is falling right through the pavement. It's now up just a single pip on the day, which would match Friday's glorious 1-pip rally to end a 10-day losing streak.
The daily chart is beyond ugly in the short-term:
...but it's even uglier on the weekly. There's a debate about whether the flash crash low broke. Bloomberg has it at 0.6741 and the low today at 0.6750 while others had it lower. I don't even really count a flash-crash low because it didn't really 'trade' there for any length of time.
So we need to go all the way back to 2008 in my books:
What's troubling is that this is coming just as US-China relations are truly souring and with stocks still within a few percentage points of record highs. What happens if there are real signs of a global slump?
Deutsche Bank is out with a note today pointing to three reasons for further declines:
- Equities look vulnerable
- Trade tensions are going to keep a lid on exports to Asia
- China's manufacturing PMI remains below 50
That doesn't even touch on the dismal situation in iron ore and the uninspiring domestic picture.
"A drop beyond 65c for AUD/USD seems hard, given the USD leg could struggle with likely Fed easing and the risk of intervention. AUD/JPY likely has more downside though," they write.
