www.varchev.com

The economic conditions in Australia are tightening

Darling Harbour Sydney Australia

Rating:

12345
Loading...

Economic conditions in Australia are sharpening. Finding from an inquiry into financial industry misconduct in Australia will be announced today, which may cause a freeze on loans. This, in turn, may exacerbate the credit crunch in the country. Prime Minister Scott Morrison has warned that Australia's economy is facing "serious consequences" if this happens.

The housing market in the country usually slows down in January, but this year the situation looks worse than usual. Property prices have fallen in the past month by 1%, driven by a 16% drop in Melbourne and 1.3% in Sydney.

One of the winning sectors is the advertising one, where local companies' shares have risen 16% over the past year. At the same time, Australia's business conditions is currently experiencing the biggest drop since 2008.

The Business Conditions Index in a country suffered a severe downturn, which led to a slight sale of the Australian dollar over the Asian hours.

Apparently, Trump's trade war has negatively affected the economy of Australia, as a country is highly commercially tied to China.

The slowing of the country's growth, an anemic rise in wages over the past five years, and a decline in economic activity could lead to a very recent rate cut by the Australian central bank. Markets estimate the likelihood of a 70% reduction in interest rates this year, although recent comments from central bankers were that the next interest rate change would be an increase.

The AUDUSD pair technically signals some selling potential:


The trend remains downward and the price has reached key levels of diagonal resistance. SMA200 is also an additional serious sign of a likely new decline.

DeM (8) makes the same divergence from the previous local maximum since the beginning of December. Here we can wait for a new test of the moving average for better positioning. The zone remains suitable for building long-term positions.

Any return of the price below 50SMA may further exacerbate the downturn and see levels of 0.66 - 0.68 by the end of 2019.

Alternative scenario: With the favorable development of the meeting US China next week the situation can turn things in favor of AUD, and a closed bar over 200SMA will spoil the negative scenario at least in the short term.

Picture: pixabay.com

Source: Bloomberg Finance L.P.

Charts: Used with permission from Bloomberg Finance L.P.

Used posts:

Australia’s Housing Downturn Deepens as Prices Hit 2016 Levels

Australia Firms See Worst Slump in Conditions Since Financial Crisis


 Trader Nikolay Georgiev

Read more:

RECCOMEND WAS THIS POST USEFUL FOR YOU?
If you think, we can improve that section,
please comment. Your oppinion is imortant for us.
WARNING: Any news, opinions, research, data or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. Varchev Finance Ltd. expressly disclaims any liability for any lost principal or profits which may arise directly or indirectly from the use of or reliance on such information. Varchev Finance Ltd. may provide information, quotes, references and links to or from other sites and blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the sites, blogs or other sources of information.
Varchev Finance

London


25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256

Universal numbers

World Financial Markets - 0700 17 600    Varchev Exchange - 0700 115 44

Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.

Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006

The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.


Disclaimer:

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

chat with dealer
chat with dealer
Cookies policy