Originally published by AxiTrader
The Australian dollar's rally continued overnight and at 0.7634 this morning it is up a little more than 1% on where it was this time yesterday.
A large part of that rise has been the weakness in the US dollar over the past 24 hours. It's a weakness which makes little sense when taken against a backdrop of a Fed tightening, a strong signal of more, and a positive outlook for the economy in the year and years ahead.
But traders, investors, and the market, simply don't believe either the Fed will act on the "dot plot" or don't believe the US economy is going to perform as they expect.
So the big dollar is lower and the Aussie dollar up and out of the recent downtrend.
Because this is largely a US dollar move how far and how fast the Aussie heads higher, or how sharply it turns around are largely going to be driven by the other side of the cross.
But, that said, today's November employment data is still likely to be a potentially big catalyst for traders.
The Reuters survey says the market is expecting a rise in employment during November of 18,000 and an unemployment rate of 5.4%. Given the enduring strength of the NAB Business survey employment sub-index and given that Westpac's consumer sentiment report yesterday reported consumers fears of unemployment are falling that seems a reasonable assumption.
Such a result would likely push the Aussie up to challenge the recent high a 0.7653. Should it break then the 0.7730 region - 38.2% of the recent downtrend from 81 cents - would be the next target.
On the downside support is at 0.7597 then 0.7560.
Have a great day's trading.