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Poor trade surplus turns the Aussie weaker

After falling nearly 500 pips against the Swiss Franc in the last two months, the AUD/CHF pair is trying to gain back the lost turf. The reversal was also supported to a certain extent by the Australia’s first-quarter GDP growth of 0.3%, versus analysts estimates of 0.2%. Ironically, it has been the slowest rate of growth since late 2009. Additionally, there are several other reasons to believe that the AUD/CHF pair, which is currently trading at about 0.7320, will decline again.

The possibility of a hung Parliament in the UK has increased political uncertainty. That is likely to increase a demand for the safe haven currency such as the Swiss Franc. Until a new government takes charge, the Swiss Franc would be in demand.

On Thursday, the Australian Bureau of Statistics reported a trade surplus of A$0.56 billion, down from A$3.17 billion in the previous month and lower than analysts’ estimates of A$1.91 billion. Exports of coal and coke fell sharply during April.

Switzerland Global Enterprise (S-GE)

In Switzerland, the Federal Statistical Office stated that the consumer prices increased 0.2% m-o-m in May. During the previous month, the index grew 0.2% as well. The economists did not anticipate any change in the consumer prices.

In Switzerland, the State Secretariat for Economic Affairs (SECO) also reported an unemployment rate of 3.2% in May, unchanged from the previous month, but better than analysts expectation of 3.3%. The seasonally adjusted data indicate improving labor conditions. Thus, strong economic data and political uncertainty in the UK is expected to strengthen the Swiss Franc against the Aussie.

Technically, the pair is facing resistance at 0.7310. The MACD indicator is curved downwards. Likewise, the stochastic oscillator is moving in the overbought region. Thus, we can expect the AUD/CHF pair to begin a short-term downtrend.

In order to benefit from the probable downtrend, we may go short in the AUD/CHF pair near 0.7310, with a stop loss order above 0.7410. If the trend reversal happens as anticipated, we would cover our short position near 1.7160.

AUD/CHF Pair: June 12th 2017

AUD/CHF Pair: June 12th 2017

To maximize returns, we are also looking at the possibility of investing in a call option offered by a binary broker. Before going ahead with the investment, we would make sure that the broker offers a weekly expiry contract. Finally, we would also try to enter when the pair trades near 0.7310 in the OTC market.


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