Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Australian Dollar Higher As Risk Appetite Lifts Again

Published 26/02/2018, 01:24 pm
EUR/USD
-
AUD/USD
-
US10YT=X
-
DXY
-

Originally published by AxiTrader

I highlighted the 4-hour trendline on Friday that had been constraining the Australian dollar at the back end of the week.

And the battler continued to respect that trendline until the few hours of trade when the rally in US 10-year bonds helped ignite a coincident rally in US stocks. This in turn saw a rally in the Aussie dollar as risk appetite lifted.

So the Aussie sat this morning around 0.7833 off a low of 0.7804 on Friday evening before the rally in stocks saw the buyers return.

That's a positive - as I always say, right risk appetite is a key driver of the Australian dollar. That's true both of the upside and downside.

So if US bonds are rallying a little and US stocks are rising, as a result, the Aussie gets a double benefit of both the improved risk appetite and - perhaps - a compression in the spread between US dollar and Australian bonds in the Aussie dollar's favour.

But what's key here, again, is that the Aussie dollar remains well supported above the recent low at 0.7758 and may even retain that support if the euro starts to fall toward 1.22 as the US dollar rallies. That's because the euro fall could be part of the bond, stock, US dollar rally the first two legs of which should be Aussie dollar supportive.

Of course US data at the end of the week is going to be important - we see the release of Q4 GDP, PCE, and non-farm payrolls on Thursday and Friday. We also get CapEx in Australia.

Till then though the charts suggest 0.7847/58 as resistance and then 0.7902 is the 38.2% retracement of the recent selloff.

Chart

Have a great day's trading.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.