MasterForex: Concentrated outbreak of risk factors, the Australian dollar may rebound - masterforex

by master0722 on 2011-08-08 16:59:27

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Last Friday, the U.S. released better-than-expected non-farm employment data, and the unemployment rate also declined, reducing market risk aversion. However, Standard & Poor's downgrade of the U.S. credit rating over the weekend has put significant pressure on the dollar's performance this week, with high-risk currencies like the Australian dollar being impacted the most.

S&P's downgrade of the U.S. rating has once again filled the dollar and even the entire financial market with uncertainty. The downgrade of the U.S. credit rating has increased market concerns and possibilities for a new round of financial crisis. Technically, the dollar's movement is still within a controllable range and has not broken through any critical levels. However, if the S&P downgrade continues to escalate, it remains uncertain what the eventual outcome will be, making it difficult to predict the medium to long-term trends in the foreign exchange market.

The foreign exchange market was already complex due to unresolved issues such as the EU debt crisis, the U.S. debt crisis, and the significant pressure of a global economic slowdown. Just as the third round of quantitative easing seemed imminent, S&P suddenly downgraded the U.S., leaving the market at a loss.

In other words, if S&P could downgrade the U.S. credit rating today, it would be equally plausible for them to downgrade Spain or Italy tomorrow. Would this reignite the EU debt crisis? Judging from Greece and Ireland’s precedents, the market ultimately wouldn’t believe that Italy and Spain could remain unscathed. Therefore, predicting mid-term exchange rates in the short term is meaningless. Investors either need to step aside and observe or should consider short-term operations.

**Australian Dollar/US Dollar:**

Last week, the Reserve Bank of Australia indicated that they had considered tightening monetary policy and lowered their GDP forecast for 2011. However, S&P's downgrade directly affected the Australian dollar's trend, causing it to easily break through all moving average support systems. If it cannot regain the important support level of 1.0470 in the near future, the technical outlook for the Australian dollar may turn bearish. However, due to the obvious technical overselling, the Australian dollar may rebound this week. The strength of this rebound will determine the future trend of the Australian dollar, so investors should pay special attention.

**Gold:**

S&P's downgrade directly influenced the gold market, pushing it strongly above the $1700 mark. There are currently no clear factors that can stop the upward movement of gold. Whether it's the EU debt crisis, a new financial crisis, the Federal Reserve's third round of quantitative easing, or even the U.S. credit rating being downgraded, whether the dollar falls or the euro falls, there are reasons supporting the rise of gold prices. Therefore, look for opportunities to go long when prices dip. Try not to chase the rally; if it retraces to around $1690, you can consider building positions.

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