The continued expansion of the coronavirus around the world has hit global confidence and the outlook for growth.
The S&P 500 has fallen 6.3% this week and the ASX 200 5.5%, as risk is sold and yields tumble.
Central bank expectations have become significantly more dovish.
A Fed rate cut at the April 29 meeting is now 65.5% priced on the CME and OIS fully price an RBA cut in August rather than September following a rise in unemployment to 5.3% last weeknL4N2AK0BB.
Meanwhile the AUD/USD has consolidated in a tight range around 0.6600, but the underlying downtrend remains intact.
Charts are bearish with daily, weekly and monthly 5, 10 and 21 moving averages tracking south. Twenty-one-day Bolli bands are a very good indicator of an overextended market.
The falling lower band comes in at 0.6587, which is close.
Technically the current consolidation is healthy price action in a strong trending market, which eventually targets a test of long-term support at 0.6263, 76.4% of the 0.4775-1.1081 climb between 2001 and 2011. Authorities are trying desperately to control the coronavirus, but it appears to spread very easily and the incubation term is uncertain at this point nL1N2AP0TC.
Sadly, this could be the next black swan event.
aud feb 26 Click here