In this article we will give the outlook for AUD/USD, NZD/USD, USD/ZAR, and USD/SGD – The first three are all commodity currencies and Yuan proxies and the latter is a Yaun proxy highly sensitive to global growth contraction or expansion. The Chinese economy is slowing and so too is the global economy which points to a stronger USD.
In articles a few weeks ago we covered all the pairs in this article and the USD has started to show strength and we expect more to come. We have covered the slow up in China in an article earlier today which you can check out – here we will look at the overall global economy slow up.
A Slowing Global Economy
"The threat of global recession in the second half of 2023 has returned, as July Sales Managers Survey data shows the USA and China both treading water, as interest rate pressures mount." (WORLD ECONOMICS)
Global trade is also collapsing which we can see via traffic on major shipping routes.
The global slow is bullish for the USD and it could get worse so while the USD is in an uptrend we could see far higher prices going forward with pullbacks being buying opportunities.
Copper is used widely in the global economy and has the nickname "Dr. Copper" in terms of its price gives an indication of the health of the global economy the recent bounce on the hopes of a recovery in China after COVID reopening would lead to strong Chinese and global growth has now faded and far lower prices are expected - the outlook via the big monthly chart below:
Trading Big Trends Tips
In terms of the 4 pairs below we are using both monthly and daily levels to find the big levels of support and resistance in terms of the USD - the monthly chart not only can give you targets that cant be seen on the daily charts but also if levels line up with daily support which makes the daily support levels stronger in our view. Also in any big down trend or up trend you should keep your eye on the 20 Day Moving Average (the green line on the charts below) as corrections of overbought or oversold will tend meet support or resistance into the average.
The USD is in a firm-up trend but the longer-term charts point to even more upside ahead. There is no quick solution to the global economic slow-up - we have central banks who have had to raise rates which has hit economic growth and they're likely to stay elevated to contain inflationary pressure which is easing but only slowly. We also have huge debts which we could see implode - The USD offers a really good yield against other currencies and also is a safe haven which in our view points to its uptrend continuing.
The AUD is heavily exposed to China and global growth and has fallen hard but could fall further as its main export Iron ore continues to tumble lower.
The AUD has already seen good downside and we expect more to come - the key levels of support and resistance to look out for below.
Just like Australia New Zealand has a big exposure to China and just like the Aussie we expect a big fall - the key levels of support and resistance to look out for below.
Not only is South Africa heavily exposed to China it relies heavily on foreign investment which dries up in times of global economic contraction. It does unlike the other currencies in this article have a better yield than the USD but we dont expect this to help it moving forward - We see it as buy on a break higher or on a correction
Singapore has major exposure to China and global trade and is a major financial and trade hub - the key levels of support and resistance to look out for below.