Originally published by AxiTrader
As I highlighted in my Markets Morning this morning I thought the RBA governor was mildly dovish in yesterday's statement. Throw in the big miss on retail sales miss for January which printed just a 0.1% increase for the month yesterday and you'd be forgiven for thinking the Aussie dollar has no place being up above 78 cents this morning.
In fact, it's done better than that and is sitting at 0.7819 after rallying all the way to 0.7842 overnight.
But the Aussie's move looks to have nothing to do with the Aussie dollar itself and more to do with the announcement effect of the North Korean and South Korean talks and the possible disarming of the North of its nuclear missiles.
Technically, of course, the move makes perfect sense with a run toward the 38.2% retracement of the recent fall to 0.7712 something I've discussed over the past couple of days. That level, 0.7817, was easily eclipsed overnight but the high of 0.7842 was below the 50% level of 0.7850. Above that, the 61.8% level is 0.7882.
That's a level which, if broken, could signal a run of 100 points or so to the recent high at 0.7988.
Whether or not that happens depends on a few things.
Naturally, the US dollar's moves are important. And it has fallen a little out of bed overnight. If that continues, if the euro does indeed head toward 1.25, then the AUD/USD is likely to head higher.
Likewise, after RBA governor Lowe said this morning that the next move in rates is still likely to be up, traders will focus intently on the Q4 GDP.
Have a great day's trading.