Daily Market Insights

 
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20/12/2017
AUD/USD Daily Signals
Aussie hits the resistance level

The eight biggest and complex U.S. banks evaded a major reproach on their latest “living will” bailout-prevention plans. It is a milestone that reduces the already-remote possibility that any of the firms would be broken up by the government.

The Federal Reserve and Federal Deposit Insurance Corp. shocked the firms by controlling five to eight had deficiencies. The 2016 regulator’s had made the decision to raise the possibility of bank breakups. If the regulators find deficiencies in the firm’s plan, then 2010 Dodd-Frank law empowers them to impose significant sanctions and force divestitures eventually.

The treasury yield curve steepened as the spread between the US 10-year yield and the 2-year yield increased to 60 basis points due to the increased likelihood of a House and the Senate vote on the tax bill in the next 24 to 48 hours.

However, experts believe the curve could continue devastating in 2018. Bloomberg statement says “The argument for continued flattening and then inversion is fairly straightforward. Long-term rates have remained pretty stable since the Fed began strengthening, a result of a low neutral real interest rate, low inflation expectations and a low term premium. Meanwhile, short-term rates move steadily higher. Assuming long rates remain held down, just a handful of rate hikes as the Fed anticipates would invert the yield curve.”

Yesterday, the 10-year yield raised to 2.472 its highest level since Oct.27. Meanwhile, the 2-year yield was extremely passive around 1.85 percent.

The AUD/USD pair’s price suffered from the stability to form an obstacle against the negative attempts at the 0.7671 level. This keeps the pair’s sideways stability below the main bearish resistance that located at the current levels. In spite of, the repeated positive attempts on the pair to settle above the resistance level. We keep preferring the bearish domination if the resistance gets settled at the 0.7671 level. The price gets a new negative momentum by stochastic surpass at the 32.0 level to expect the price decline towards the 0.7634 level that forms the first negative target in the near period. Therefore, we will prefer the bearish bias in the upcoming period forming a strong barrier against the positive attempts. We keep waiting for the price to reach our wild levels. The pair gathers some new negative momentum since this morning. The pair’s decline below the resistance level has been rejected by trend line rejection.

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