The Reserve Bank of Australia (RBA) has maintained a fairly neutral bias when it comes to the value of the AUD.
That said, they also always seem to add a sentence or two in their monthly statement which describes how a higher AUD will act as a headwind to the domestic economy as it transitions to a non-mining base.
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In short, it may not be an official RBA policy to engineer a lower AUD price trajectory, but it is clear that their policy goals would be much easier to achieve with the AUD/USD trading below .7000, than above .8000.
The AUD/USD has pushed through the .7700 level this week for the first time in over 3 months. The pair is struggling to sustain this potential breakout after a disappointing jobs report on Thursday.
The Australian Bureau of Statistics (ABS) announced 13,500 new jobs for the month of January, but they were all part-time positions. The participation rate slipped to 64.6% from 64.7%, which accounts for the decline in the unemployment rate to 5.7% from 5.8%.
It seems clear from these statistics that the RBA may have to ramp-up their discussions about further rate cuts to lower the AUD going into Q2 of 2017.
Technically, the AUD/USD has rallied from .7165 on January 2nd, to .7730 during yesterday’s NY session. The nearly 8% advance against the Greenback has led all the major pairs over that time.
As the corrective forces unfold, the Aussie looks vulnerable. A move back toward .7600 seems likely and a break of .7665 would signal a near-term top is in place.
BetaShares offers two Exchange Traded Funds (ETFs) which allow investors to profit from the AUD trading lower against the USD.
The USD and YANK are both traded in a unit trust structure on the ASX.
The value of the units increase as the price of the AUD/USD trades lower. The USD is unweighted, which means a 5% drop in the AUD/USD will realise a 5% increase in the unit price.
The YANK has an approximate 2.5 X times weighting, which means a 5% drop in the AUD/USD will see a gain of roughly 12.5% in the price of the shares.
