Do not dig a hole for another, you will get into it yourself. Malcolm Turnbull, who replaced Tony Abbott as prime minister in 2015, is now forced to resign himself. Ex-Treasurer Scott Morrison will take his place. This is the sixth chapter of the cabinet of ministers for the last 10 years, which allows us to talk about an extremely dangerous political landscape. Italy, with its Eurosceptic victory in parliamentary elections, did not stand side by side, but if one digs deeper, it becomes clear that the impact of events on the peninsula is more weighty than on the Green Continent. Hence the roller coaster on AUD / USD.
In the case of Italy, we are talking about the potential exit of the republic from the eurozone, which can destroy the currency block as a house of cards. The previous leadership is blamed for huge debts and sluggish economic growth. In Australia, everything is different. The change of the Prime Minister was due to behind-the-scenes games within the ruling Liberal Party. The green continent has been living without recession for 27 years, unemployment is steadily falling to the 5% level, which the RBA calls a full-time job, GDP is pleasing to the eye. The political crisis brought only a spoonful of tar into the barrel of honey, while the main drivers of the Australian dollar's quotations change are the global appetite for risk, commodity markets, trade wars and differential interest rates.
The fact that the Reserve Bank does not intend to begin the cycle of monetary policy normalization, at least until the second half of 2019, while the Fed continues to move towards a neutral interest rate (2.5-3%), ensures the growth of the yield differential between US and Australian bonds . He creates a solid foundation for the "bearish" trend for AUD / USD. At the same time, Jerome Powell's speech at Jackson Hole lowered the likelihood of an aggressive monetary restriction of the Fed and allowed the bulls on AUD / USD to lick their wounds.
Dynamics of the yield of US and Australian bonds
Despite the resumption of talks between Beijing and Washington, it is not necessary to talk about a breakthrough. The probability of a compromise is extremely low, and the States, after exchanging import duties for $ 50 billion, are preparing a new package of $ 200 billion. The trade wars contribute to the slowdown of the Celestial economy, whose role for Australia is difficult to overestimate. At the same time, the intention of the People's Bank to return to the practice of the daily adjustment of the renminbi in January, which is canceled in January, confirms that PBOC is interested in preventing the growth of USD / CNY above the psychologically important level of 7.
The strength of the US economy, the growth of corporate profits of US companies, the tenacious reluctance of the yield of 10-year Treasuries to exceed 3% and the slow normalization of the monetary policy of the FRS strengthen the global appetite for risk and thus support bulls for AUD / USD. In my opinion, many components of the external background unfavorable for the "lazy" are already largely taken into account in its quotes, which creates the ground for stabilization of the analyzed pair.
Technically, only the return of AUD / USD to the middle of the previous consolidation range 0.732-0.7465 and the successful storming of the upper boundary of the downward trade channel will allow the bulls to continue on their way to the north.
AUD / USD, daily chart
