Originally published by AxiTrader
Yes.
The Australian dollar is higher today because the US dollar suffered a sharp reversal last night. Part of that was obviously the comments from US Treasury Secretary Mnuchin who seemed to endorse the benefits of a weaker dollar for the US economy.
That's something we all know. It's something that the RBA hopes for here in Australia when it warns of the impact of growth from a higher Australian dollar. It too sees benefits in weakness.
And that turn around in the US dollar answered the question I posed yesterday of how much support the Australian dollar had.
Clearly, the answer is plenty, with the Aussie trading through a 0.7870/0.7950 range. It's at 0.7945 now.
The support was in evidence yesterday.
The Aussie held around the 79 cent level all day, it was knocked lower in London early but bounced back, and then the US dollar's weakness has allowed it to climb back into the mid 79 cent region.
But as I keep writing - and I'm sure readers are bored of reading - it's the backdrop against which the Aussie sits that is the source of its support. Of its strength.
Global growth remains the strongest it has been in a decade.
Just look at that Canadian Q2 GDP data released last night. The market was expecting a 3.7% annualised result but the print was 4.5% annualised. That's growth of more than 1% in the quarter the way the ABS would report it here in Australia.
Solid.
Likewise, copper remains strong at $3.08 per pound, Iron ore rallied again overnight, and yesterday's release of the official Chinese manufacturing PMI was better than expected.
So the Aussie remains well supported fundamentally. And the charts showed that even though price dipped below the trend line intra-day the trend has been maintained on a day close basis.
I was using a break of 0.7865 as confirmation the trend was over. So the low around 0.7870 keeps it intact for the moment.
That remains the bottom support before 7800 still. On the topside, the resistance is the high for the week around 0.7980/85 then 0.8040/60.
On the day in Australia, we only have the release of the AiGroup performance of manufacturing survey before the US non-farm payrolls tonight. My sense is that the market is guessing at another big beat. So the risk might be more skewed than recognised for the US dollar. Either way though the technical levels highlighted are the ones I'm watching.
Have a great day's trading.