Originally published by AxiTrader
With iron ore surging again, copper remaining strong, and the miss on US non-farms Friday undermining the US dollar the Aussie hit a high of 0.7994 before closing the week at 0.7966.
It looked set to have a strong week with the release of the RBA's decision on interest rates - and accompanying governors statement, GDP, and retail sales all likely to underscore the strength of the Australian economy and thus the eventual move higher in rates during 2018.
But, in the wake of the North Korean testing of a hydrogen bomb over the weekend, that strength has been sapped in early Asia trade this morning with safe haven currencies bid and the Aussie dollar under a little pressure.
At 0.7951 it is off the early morning low of 0.7934 but with Australian Prime Minister Malcolm Turnbull warning that the risk of war on the Korean Peninsula is the greatest it has been in 60 years and with the South Koreans confirming they conducted their own missile launch, Aussie dollar bulls are likely to be a little more circumspect as we start the week.
So, the bullish bias the Aussie was set to open the week with, and potentially head to and challenge the recent high around 0.8050/60, has changed.
I say that because the Australian dollar almost universally comes under pressure when markets suffer a bout of risk aversion - no matter what the fundamental drivers may say about the attractiveness of the AUD/USD.
It's simply a function of history during crises and the position the AUD/USD plays in global traders and investors portfolios.
But we can still use technicals as our guide to the key levels.
The AUD/USD is currently at 0.7951 down 0.2% from Friday’s New York close. As you can see in the chart above it's not far off the uptrend line from this rally either - that sits at 0.7928 at present. Thursday low at 0.7920, if it breaks, would confirm the move.
The focus would then turn to 79 cents and - more particularly - the 0.7965/70 region where the Aussie found support. Below that it's the August low in the 0.7800/10 region.
Topside a break of 0.7995 would be a sign the rally is back on.
Have a great day's trading.