Aussie Dumped As PPI Indicates Slowdown

Late yesterday, the Australian Bureau of Statistics reported a fall of 0.2% in the producer price index (PPI) for the first quarter in 2016, in comparison with a 0.3% increase in the preceding quarter. In this period, the index was supported by strong rises of 1.4% and 4.9% in prices in the vehicle manufacturing and publishing sectors, respectively. However, the big downward shadow from other sectors covered the whole economy: prices in the petroleum sector declined significantly by 16.2% while agriculture witnessed a sharp fall of 6.5%.

The Reserve Bank of Australia (RBA) on April 28 released data on March money supply. The broad money (seasonally adjusted), rose 0.6% last month (compared to 0.4% in February), increasing 6.3% from a year earlier.

RBA is scheduled to hold a meeting on policy next Tuesday with some expectations for a lowering of the interest rate, due to the economy’s slowdown.

Today, Canada released its GDP’s reading for March, meeting economists’ forecast at -0.1% compared with the previous month. In today’s trading session, oil prices surged to a new record high since the beginning of this year, thanks to a supply-cut from US production and a weakening dollar. Being heavily dependent on the energy market, Canada’s economy is witnessing some signals of a recovery, based on the oil rally.

audusd d1

Fig. AUDCAD D1 Technical Chart

The Stochastics chart shows that AUDCAD has dived into overbought territory and no signals for a reversal are currently evident. ADX (14) is registering at 34.5281 and DI+ is far higher than DI-, indicating that the bear is overwhelming. A red arrow has appeared on the price chart, signaling a selling position. The next support to test is 0.94683.

Trade suggestion

Sell at 0.95187, Stop loss at 0.95428 Take profit at 0.94683

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