AUD/USD Pullback From 2020 High Fizzles As Federal Reserve Balance Sheet Widens. There will be an acceleration in the current USD/AUD ratio and the AUD/USD may begin to converge to a new low in mid-2020, as the Federal Reserve starts to tighten monetary policy.
It is believed that the Federal Reserve is gearing up for a possible Interest Rate Hike in September as it has been making preparations for its interest rate hikes. It is also believed that the Fed will start to ease off on its bond purchases to support the economy. This is in order to maintain financial liquidity in the economy and encourage spending.
If the AUD continues to continue its rally in the second half of the year, and if there is an acceleration in the Federal Reserve’s interest rate hikes, it is very likely that the AUD/USD will break out of the range and move to the higher end of the range. The AUD/USD may even hit the psychologically important $AUS10K mark in some places. In the long term, the AUD/USD may become a better alternative than the USD and may even surpass the USD as the global reserve currency.
When the AUD moves beyond the range of around $AUS10K, the US Dollar may come under pressure. The stronger US Dollar is an indication of strength in the economy. Strong dollar is also a signal of high inflation in the US and a higher dollar is also a signal of rising unemployment in the United States.
An acceleration in the AUD/USD movement may be seen in mid-2020 if the Federal Reserve tightens monetary policy and begins buying bonds. The Federal Reserve has been doing this for the past 6 months. With tighter money and an elevated unemployment rate, there is a chance that the US Dollar could fall below its effective exchange rate against the AUD in early 2020.
The AUD is not yet in a bear market and the currency is currently trading lower because the Australian economy has been growing at a steady but slow pace. The slowing growth of the economy is expected to cause an acceleration in the AUD/USD, but that may not happen until late in the year.
As the Australian economy is growing at a slow but steady pace, more jobs are being created, there is a gradual increase in the consumer spending and income levels. This has helped to increase the demand for the AUD, but it is uncertain whether the AUD is likely to become a reserve currency.
It is still early days for AUD, but if it is a reserve currency, the appreciation will be gradual and not as dramatic as in the past when the value of the AUD declined sharply. An acceleration in the AUD/USD may occur if the Federal Reserve loosens monetary policy and starts buying bonds in an effort to support the economy.
The United States economy has been affected by the Federal Reserve’s decision to buy up bonds from banks in order to support the growth of the American economy. If the United States does become a reserve currency, the value of the Australian Dollar will depreciate.
The other major economies such as the European Union, Japan, China and India are expected to follow the lead of the United States and will start to adopt the AUD as a reserve currency. The weakening of the AUD may cause more financial problems for the US economy and the dollar. There is the possibility that the dollar may weaken even more than it has been lately. and it may take years to see whether the AUD can become a reserve currency.
To keep an eye on the AUD and the United States economy, investors should subscribe to real time news reports. The major financial newspapers and the Internet also provide a wealth of information for investors who wish to stay on top of the situation. There are also many Forex trading forums on the Internet where traders discuss the possible direction of the AUD and what impact the AUD may have on the US economy.
The AUD is a currency that has been gaining strength over the last few years. If it is a reserve currency, the value of the AUD will be dependent on the political situation of the country in which it is being traded.