Originally published by AxiTrader
The Aussie dollar is a little higher this morning at 0.7778.
But when I say a little, that's all I mean as AUD/USD rejected a run at 78 cents - making a high around 0.7797 - and as it underperformed the euro and pound last night, both of which were buoyed by stronger than expected data releases.
This, along with the clear inability of the US dollar to break down through 1.1660 against the euro or hold above 113 in US Dollar Index terms recently helped see the dollar down across the board. Even the kiwi was up 0.1%.
That small introduction tells you everything you need to know about the Aussie dollar this morning. It's higher because the US dollar is weaker not because of any inherent interest from traders in the Aussie other than from that fact the US dollar is weaker.
Certainly, yesterday's NAB business survey was far from a disaster. Indeed with conditions, trading, profitability, and employment all still strong. And with confidence bouncing back a little from +5 to +7 I'd say this survey gives me reason to hope that the economy is still on an even keel.
But as I highlighted in my Markets Musing column earlier the fact retail is in contraction territory gives me pause and the Australian economic bears something to claw at.
That's part of the reason the Aussie lagged the euro's rally and it's also partly why the Aussie couldn't retake 78 cents.
But the key right now is the US dollar and on that front it really does seems the bulls need continual reinforcement that the US economy is on the right track, that the fed will, in fact, be tightening. That makes the release of the minutes to the last FOMC meeting tomorrow morning extremely important as they are likely to reinforce this is a Fed on track to continue to tighten.
Equally though with German growth being upgraded, see Markets Musing, in many ways this is as much about the ECB as it is the Fed. So Mario Draghi's speeches will be important as well.
Closer to home the release this morning of the Westpac consumer sentiment data is going to be interesting insofar as not just whether the pessimists still outweigh the optimists but also in the underlying answers to questions on family finances, now and in prospect, wisest place for savings, and the unemployment expectations index.
Looking at the chart now and the chance of a rally back to 78 cents, perhaps to 0.7830/40 looks high as the AUD/USD seems to be rounding out after hitting the 0.7730/50 region late last week.
I don't have a system generated order for the AUD/USD yet but I do for the euro and Dollar Index and my system went short USD/JPY yesterday. So the chances of an Aussie dollar rally, even if it's a laggard, seem relatively good.
Have a great day's trading.