Both currencies are weak and have a lack of incentitives for growth. In this situation the most optimal course are the deals on the trend.

At the end of October an intense downtrend in favor of the AUD was formed, but this wasn't thanks to an outstanding performance in the Australian economy. The increase was caused by the economic downturn in the EU, which is becoming more pronounced. At the same time, both currencies remain under pressure due to the economic situation in the EU, Australia, and the recession in the global economy as a whole.

The main event of the week can be considered the pause in the trade conflict between China and the United States. Commodity currencies certainly received support with this decision and in the future we can talk about the lack of pressure from the trade conflict on the market in the next two months. However, the latest data on the Australian economy continue to negatively impact the AUD value. Released today, Australia's GDP report showed weaker GDP growth in Q3 than expected. The GDP grew by only 0.3% against 0.9% in the previous period, which is the lowest result since the third quarter of 2016. The volume of construction of new houses is also decreasing and inflation is slowing amid slowing wage growth. In addition, the PMI index fell, which in October was the lowest since 2017 and amounted to 51.3 points. This situation in the economy forced the RBA once again to leave the rate unchanged, which also had a negative impact on the AUD. Perhaps the expected tomorrow data on the balance of trade will support the AUD rate, if they meet the expectations of investors. Recall that an increase in the surplus is expected, which is quite a bold forecast, given the problems in the Australian economy.

The situation in the EU is no better than in Australia. Economic recession is observed even in Germany, which has recently been the engine of the entire EU economy. The German business sector slowed to the lowest level for the last 4 years, which was seen with the release of the composite index of business activity, which fell to 52.3 points. The decline in the index is observed for the fourth month in a row. The situation is similar with the PMI manufacturing index, which in November fell to 51.5 points, the lowest indicator since August 2016.


In this situation, the most optimal seem to be the deals on the trend, given also that the rates continue in the overbought area, according to the Stochastic oscillator. This may also mean the end of the price correction. At the same time, the decline will be limited, given the lack of incentives for the AUD to strengthen.