Goldman Forecasts Higher Yields in Australia; AUDUSD Technicals

by on February 11, 2014 5:38 pm BST

Goldman Sachs Asset Management forecasts higher yields in Australia’s sovereign bonds and believes 10-year yields could rise nearly one percentage point in 2014. This follows the weakest returns on government bonds in four-years. The Australian 10-year yield moved up to 4.18 percent, a two week high.

The tone out of the Reserve Bank of Australia (RBA) has been more positive as the central bank concluded that the weaker Australian dollar will help expand growth and will refrain from cutting the benchmark from the 2.5 percent historical low.

The daily chart of the AUDUSD has looked bullish on the weaker US dollar, and the rallies in commodities are pushing the pair up, too. The pair looks to have price action support at .8854, and price action is currently testing resistance at .9023. A break and close above resistance will continue the bullish momentum to .9113. The target corresponds with the 23.6 percent level on a Fibonacci retracement back to the high of 1.0582.

Traders should expect some resistance around this level as the RSI is steadily moving into over extend territory, but it’s nothing the AUDUSD is not use to, currently at 62.

The momentum looks strong with the +DMI pushing higher. The ADX, trending at 21, looks stable and is slowly ticking upwards. If AUDUSD fails at key resistance levels, a drop to .8920 is possible prior to testing confirmed support levels.

1D Chart of AUDUSD

1D Chart of AUDUSD