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AUD/USD forecast for 16.06.2020

June 16, 2020

June 16, 2020

Hedge funds cut the teeth on the AussieDmitri Demidenko

Open AUD/USD positions according to Australia’s jobs report

Averaging is an extremely dangerous technique. Only a newbie knows about it. However, the desire to breakeven a losing trade sometimes lets down even a professional trader. The attempt of hedge funds to increase shorts on the Australian dollar as the price is growing could turn into a disaster. The [AUD/USD][1] pair was 28% up from the lows hit in March. The AUD bulls were a little discouraged in the week ended June 12 by the sell-offs in the US stock market amid the concerns about the second wave of COVID-19. The correction will hardly be deep, and the restoration of the AUD uptrend can cause much stress to speculators.

Dynamics of AUD/USD and speculative positions on the Australian dollar

![LiteForex: AUD/USD forecast for 16.06.2020][2]

Source: Bloomberg

Hedge funds bet on many factors negative for the Aussie. The first since the 1990s recession of the Australian economy, the escalation of the US- China trade war, the introduction of China’s import tariffs on Australian goods because of discontent over Canberra’s allegations of the coronavirus laboratory origin. All of this isn’t working yet. China buys about 60% of the world’s iron ore, with two-thirds of the supply coming from Australia. Following a drop in the February-March period, iron ore imports increased by 19% in April, and the price has been 25% since early April. The growth of the iron ore price is one of the major [AUD/USD][1] growth drivers.

Dynamics of AUD/USD and iron ore

![LiteForex: AUD/USD forecast for 16.06.2020][3]

Source: Trading Economics

It is not beneficial for China to boost import tariffs. First, the price of domestic consumption will increase. Second, the US can increase its import tariffs as a retaliation. Third, Canberra tries to settle down the matter with the accusations against China.

The Australian dollar is the simplest means to represent the risk appetite of the Forex traders, that is why the rally of the US stock indexes supports the [AUD/USD][1] bulls. The potential down correction looks limited as the RBA is not willing to introduce negative interest rates. The central bank expressed no concerns about the strengthening of the Australian dollar. Besides, a deep correction of the S&P 500 is not what Donald Trump wants. According to HSBC, the Aussie should be up to $0.75 in 2021 due to the combination of three factors: stimulating fiscal and monetary policy, the growth of the global risk appetite, and the record surplus of the Australian foreign trade. The Australian dollar always grew after global recessions in the past. So, it may do the same in the future.

In my opinion, the consolidation or the rally of the US stock market will support the [AUD/USD][1] rise towards the [target at 0.72 defined earlier][4]. It is not yet too late to take part in the [LiteForex contest][5] devoted to its 15th anniversary and buy the Aussie. One could enter purchases if Australia’s jobs report, which should be published on June 18, is strong. Bloomberg experts expect the employment to contract by 125,000. However, if the Australian employment data in May are as strong as the US jobs report, the hopes for the V-shaped recovery of Australia’s economy should send the [AUD/USD][1] up.

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Price chart of AUDUSD in real time mode

![Hedge funds cut the teeth on the Aussie][8]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. my.liteforex.com/trading/chart?symbol=AUDUSD&returnUrl=true
  2. cdn.liteforex.com/cache/uploads/blog_post/fundamental_analysis/audusd-position-16-06-20.jpg?w=30&s=a2da96da15d24aa14ca360cbc43eedaa
  3. cdn.liteforex.com/cache/uploads/blog_post/fundamental_analysis/iron-audusd-16-06-20.jpg?w=30&s=09e095ffe72fe073620c0f02650ff5a8
  4. www.liteforex.com/blog/analysts-opinions/aussie-works-wonders/
  5. www.liteforex.com/contests/dream-draw/
  6. my.liteforex.com/?category=analysts-opinions&slug=hedge-funds-cut-the-teeth-on-the-aussie&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
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  8. cdn.liteforex.com/cache/uploads/blog_post/fundamental_analysis/liteforex-blog-audusd-16-06-20.jpg?q=75&w=1000&s=f1133e2b33ac6f6ce2b7350d7e843f18