Originally published by AxiTrader
Many of my readers won't be old enough to remember the intro to that old TV serial which went, "Is it a bird? Is it a plane? No! It's Superman!".
But I've been reminded of it over the past couple of days as I've watched iron slide and it popped into my head again this morning as the high flying Aussie dollar defies the tractor beam of a lower copper price, falling iron ore, and general weakness in commodities.
Of course, a part of that is the recovery in risk appetite we've seen in recent days as President Trump, despite or perhaps because, of Gary Cohn's resignation has tempered his initial aggressive blanket approach to steel and aluminium with one that exempts Canada and Mexico and which offers other nations the chance to negotiate an exclusion.
Peter Navarro and Wilbur Ross will have ambassador's lined all the way down the halls outside their offices.
Improved risk appetite is certainly good for the Aussie. And it also benefits because if the trade war is being averted - and I'm not certain yet given China seems to be the real target - then economists, traders, investors, and central bankers don't have to recalibrate their expectations for growth downwards.
So we retain a positive global growth outlook which is also positive for the Aussie dollar.
But I can't help but fell the Aussie is on tenuous ground at 0.7785 when commodities are on the slide. of course it is down about half a percent from yesterday's levels but that's against falls of 3% for iron ore and 2% for copper.
Looking at the charts yesterday's high was on the tentative downtrend line I'd drawn in. That confirms the current downtrend remains intact. The Aussie is tooing and froing around this 200-day moving average but is back below it.
My sense is it has further to fall.
A break of 0.7770, the Cohn/GDP low of the week is key. Or of course a bounce as may be the case. Should the Aussie slip below there then 0.7725 comes into the frame, with the recent low around 0.7712 just below that. A break of the latter level suggests 0.7612.
Topside we'd need to see yesterday's high, and the trendline, break. So let's call it 0.7840. But there is a 50% retracement level of the recent fall at 0.7850 and then the 61.8% at 0.7882 which also offer resistance.
Tonight's non-farms is the big one for the Aussie. How it feeds the week will set it up for the next month.
Here's the chart.
Have a great day's trading.