USD vs AUD for SGD

Much talk have been on USD to continue weakening while AUd going from strength to strength. Of course I am referring to the Channel News Asia(CNA) Forum on stock market. For one reason, at least the USD vs SGD has a direct effect on the stock market here. Many have claimed that the day USD rises is the day the stocks tumble. For me I am not too sure about the cause of such correlation since I am not a Fundamental in the first place. What I remember is that the demand of money denotes the demand of the stocks, if the investers want to invest into Singapore Market, they need to buy SGD thus SGD rises due to higher demand. So if SGD drops against USD, it means investment s flowing out.


Fig 1 AUD Weekly Chart

While many continues to be hype up with AUD, I would consider AUD to be very high for me. After all, what are the major bulk of AUstralia market to make its currency in such high demand. I think through the years, Australia depends more on its tourist industry than others for its economy. I went to Australia this May, while there are argricultural produce in the country, the cost for such produces is very high in the local market, and I am comparing with Singapore.

I see Australia to be highly uncompetitive in turns of its productivity thus its currency definitely do not worth this rate. Nevertheless, this is only my own opinion.

As for the charts, there has been continuous drop in the recent 2 weeks, the level seems quite significant. I really could not understand why when AUD stopped moving down last week that people claiming it to be strengthening. It is just pausing.

The way I see it, its Stochastic and RSI is already indicating divergence, the chance of further downtrend is high, my guess is 70-80%. The only wierd thing is its candlestick pattern which indicate an Harami. But there is still a need for confirmation.


Fig 2 USD Weekly Chart

While USD has been showing weakness lately, my bet is still on this currency. The only doubt I have is its potential double top signifying a target of SGD1.28 per USD.
I don't know probably USD has to fall till that level before it considers a reversal. At the same time there is a chance that USD might forego the "Double Top" ( meaning pattern break down) and reverse this instance.

Personally I am hoping this to be the scenary, one reason is because I have a small stake in it. No, I did not trade USD, I have an FD on USD, which is long term investment. While short term fluctuation might not affect me at all, it is still giving me the feel good sensation knowing that I am on the right side of the market.

On the technical side, Both Stochastic and RSI are reversing up with divergence. To me this is good sign. If USD go further down with both these indicators creating more divergence, it will even be a better sign for me. For the moments, the odds for me is good.