Originally published by AxiTrader
32 points is a pretty tight range for the Australian dollar to trade on any given day. But that's what we saw in the 24 hours till 7am this morning with the AUD/USD trading 0.7759-0.7790/91.
That it is stuck in doldrums while stocks in the US, and now Europe, surge higher seems difficult to reconcile. But when I take a cross-market approach and I look at the performance not just of stocks, but also of gold at $1346, of US 10's at 2.83%, and of copper at $3.07 it's clear that this is not a risk on event.
Rather it is a specific earnings-induced uplift in US, and thus global, stocks which has not leaked into other markets yet. If this was a genuine risk on move we’d be seeing gold lower and rates higher. And that, for me., is why the Aussie dollar is stuck.
So the Aussie finds itself becalmed and in the doldrums sitting at 0.7768 this morning.
But it's more than just the price action of these assets and markets I've mentioned above in the past few days.
The latest edition of the BAML global fund manages survey gives us a window into why the Aussie is becalmed even though the IMF confirmed that, so far at least, the global economy retains a steady footing with 2018 and 2019 looking like solid years of global growth.
What the BAML survey shows is that there isn’t actually an uptick in risk appetite. Or perhaps why. The survey shows that the money managers surveyed are the least optimistic about the global economy than they have been since the Brexit vote back in 2016.
Which means they won't be placing big bets on growth proxies like the Aussie dollar.
It also tells us that the US dollar remains a preeminent driver of the Aussie at the moment.
But, we do get specific stimuli the Aussie at 11.30am Thursday morning when the jobs report is released.
In the interim my 4 hour charts suggest a run down to 0.7760 again and if that breaks it’s 0.7740/45 and 0.7720. Topside it’s 0.7790/0.7810 as the key levels. The daily charts show the persistence of the current downtrend.
Have a great day's trading.