Long AUDS: bullish breakout on AUD/USD
Updated
AUDS stock is poised to take off.
The AUD/USD bullish trend will continue for the next few weeks.
AUDS
- Fund is leveraged 200-275% with 100% asset allocation on AUD/USD
- Global shutdown AUD/USD appreciation meaning first time AUDS can produce positive returns
- AUDS 1 month return of 13% beating index of 6%
- AUD/USD poised to take off
- 20 day MA crossed over 50 day and 200 day meaning bullish trend
- 20 day MA now support
- Big price jumps in light of AUD/USD rally
Fundamentals on reference asset AUD/USD
AUD:
- Recovering domestic economic data ie good PMI's, strong consumer confidence, better than expected retail sales for May, lockdowns ending sooner than expected
- Rising commodity prices ie iron ore hitting 100/tonne, iron ore supply shortage in Brazil and Australia, copper prices up 20% from March low
- Strong demand for commodities ie China infrastructure spending accounting for 20-25% of steel demand, strong CAIXIN PMI's suggest rekindling of industrial demand
- Rate hold by RBA to appreciate AUD
- "Risk-on" sentiment ie plunging DXY , gold trending sideways, US10Y yield is up, major indices (US500, FTSE 100 , ASX 200 , Nikkei) rallying
USD:
- US riots ---> extend lockdown, could start second COVID-19 wave ---> devaluing USD
- US-China tensions ----> less demand for USD, risk losing phase-1 trade deal ------> devaluing USD
- Incoming hurricane ----> could impact shale industry meaning more unemployment resulting in deflation ----> devaluing USD
- Incoming economic data -----> weekly jobless claims to climb to 1.8 million, sluggish retail sales ------> devaluing USD
The AUD/USD bullish trend will continue for the next few weeks.
AUDS
- Fund is leveraged 200-275% with 100% asset allocation on AUD/USD
- Global shutdown AUD/USD appreciation meaning first time AUDS can produce positive returns
- AUDS 1 month return of 13% beating index of 6%
- AUD/USD poised to take off
- 20 day MA crossed over 50 day and 200 day meaning bullish trend
- 20 day MA now support
- Big price jumps in light of AUD/USD rally
Fundamentals on reference asset AUD/USD
AUD:
- Recovering domestic economic data ie good PMI's, strong consumer confidence, better than expected retail sales for May, lockdowns ending sooner than expected
- Rising commodity prices ie iron ore hitting 100/tonne, iron ore supply shortage in Brazil and Australia, copper prices up 20% from March low
- Strong demand for commodities ie China infrastructure spending accounting for 20-25% of steel demand, strong CAIXIN PMI's suggest rekindling of industrial demand
- Rate hold by RBA to appreciate AUD
- "Risk-on" sentiment ie plunging DXY , gold trending sideways, US10Y yield is up, major indices (US500, FTSE 100 , ASX 200 , Nikkei) rallying
USD:
- US riots ---> extend lockdown, could start second COVID-19 wave ---> devaluing USD
- US-China tensions ----> less demand for USD, risk losing phase-1 trade deal ------> devaluing USD
- Incoming hurricane ----> could impact shale industry meaning more unemployment resulting in deflation ----> devaluing USD
- Incoming economic data -----> weekly jobless claims to climb to 1.8 million, sluggish retail sales ------> devaluing USD
Note
After the impulsive two-week rally, the pair is now consolidating. The AUDUSD hit 0.70387 resistance and with the quiet week ahead on Australia's end, traders are now looking towards US inflation, jobless claims and the FOMC meeting.
Last week's surprisingly optimistic economic data suggests the economy is recovering faster than expected and the worst is over. If data continues to be good, this will provide enough momentum for the pair to breach the 0.70387 resistance.
Therefore, I stand by my forecast.
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