The Australian Dollar (AUD) soared against the US Dollar (USD) for a sixth straight day. This recent increase trend is a manifestation of how upstream global markets are responding to increasing economic reality. This change came during a period of escalating protectionist trade measures between the US and China. These tensions served to further weaken the US Dollar. The result was dramatic—gold prices recently shot above the $3,340 per troy ounce figure that reflects value stability. This tax-driven increase is indicative of the tremendous demand among investors for safe-haven assets.
On Wednesday, gold prices reached their all-time highs. This boom has been largely driven by a collapse in the US Dollar and the continued geopolitical turmoil. Analysts have long noted that the gold market seems to prosper whenever the dollar goes down. The current environment has proven this trend right once more. Gold prices climbed as traders continued to focus on US-China trade tensions. Many others shared cautious optimism about potential new trading agreements that could emerge from the current US administration.
Even more notable was the AUD/USD pairs resilience, surging back over the 0.6400 figure and catching another wave near its yearly high. All technical indicators were in favor of the climb, especially as the all important 200-day simple moving average loomed near. This would indicate an Australian Dollar bullish trend. The AUD moved even, as rumors emerged of a falling confidence in USD. This unfortunate trend came about despite the urging of the State’s own fiscal stress, as well as increased pressure from abroad.
And yet, the euro managed to stay in the game. As a result, during the early Asian session on Thursday, the EUR/USD pair remained muted around the 1.1400 psychological level. Market participants took a wait-and-see attitude. So, too, did they take into consideration the larger political ramifications of US economic policy and movements in global markets.
Monetary Policy While there was little if any new information to be gained from Federal Reserve Chair Jerome Powell’s closely watched speech, market participants were spooked anyway. Since there was no new information to be had, it left traders feeling uneasy. They soon anxiously hung on every development in US-China trade talks. Many investors are eager to see if a breakthrough agreement could ease tensions and restore confidence in global trade.
This recent market climate has raised alarming concerns for retail investors. A shocking 81.4% of retail accounts have, according to that same big provider, lost money trading Contracts for Difference (CFDs). This staggering statistic further illuminates the dangers of leveraged trading and the need for responsible participation through education and experience.