Originally published by AxiTrader
Quick Recap
Support for the Australian dollar remained firm under 76 cents again with the low of 0.7590 just three points above last week's low of 0.7587. That reinforces the 0.7580/0.7600 zone as the key to the next move for the Aussie and a break would suggest a move to 0.7540 with trend line support at 0.7500.
While the AUD/USD is still pressured against the US dollar it is doing credibly well on the crosses as it continues to rise against the Kiwi AUD/NZD under its own steam and is being lifted higher against the yen JPY/AUDas USD/JPY surges. The outlook for both pairs remains positive.
What You Need To Know
Some days there just isn't a lot to say about the Australian dollar in its own right and today is one of those days. That's because the action in forex markets was elsewhere.
The GBP/USD fell to a low of 1.2683 - its lowest level since 1985 - before rallying back to 1.2743 this morning on a combination of oversold conditions and comments from British PM Teresa May that she's not a fan of low rates and QE.
That will be an important theme for the Aussie and forex markets more broadly in the months ahead because May is implicitly saying that monetary policy is at its wits end and fiscal policy needs to play a role. So it's interesting that Reuters reported, via Handelsblatt, that German finance minister Schaeuble is proposing a $6.3 billion tax cut. It's just an incremental move in what is likely to be a big embrace of fiscal policy in the years ahead.
On balance that should be supportive of the Australian dollar in a broad macro sense and across a medium term horizon because fiscal policy should be inherently refationary for the global economy - assuming it has some chance of success - which will provide a positive backdrop for the Aussie dollar.
For the moment though the Aussie is caught between rising yil;eds, and the potential negative impact that can have on bond spreads supporting the AUD/USD and the improvement in stocks and risk appetite which is Aussie dollar supportive.
On the crosses though the AUDNZD and AUDJPY rates are continuing to rise. In the case of Aussie Kiwi I retain my 1.0750 initial target while with regard the AUDJPY my system is long on monthly and weekly time frames and I'm looking for a move toward 0.8100/20.
