📈 69% of S&P 500 stocks beating the index - a historic record! Pick the best ones with AI.See top stocks

If The Aussie Dollar Is Going To Break Higher Now Is The Time

Published 04/11/2016, 11:58 am
Updated 06/07/2021, 05:05 pm
AUD/USD
-

Originally published by AxiTrader

Quick Recap

The AUD/USD is sitting near 0.7680 this morning just below the supply zone of 77 cents as the weaker US dollar balances out the natural negatives of weaker risk appetite and falling commodity indices like the CRB or GSCI.

Traders are now waiting for the release of the RBA's quarterly statement on monetary policy this morning. The governor's statement Tuesday after the board meeting hinted at a fairly upbeat statement and that could be a catalyst for further strength in the day and days ahead.

What You Need To Know

If the Australian dollar is going to break higher, up and through resistance in the 0.7730/50 region then now is the time that the bulls have the whip in hand. I say that because on each run higher - all 9 or 10 of them over recent months - the sellers have been steadfast in selling AUDUSD.

But selling AUDUSD means also buying US dollars, and in the current environment that is a bigger ask than it has been at any other time the Aussie has been up near or above 77 cents.

Chart

Certainly there are growing recognitions from many banks and traders that the current fair value for the Aussie dollar at the moment is around 77 cents. But traders are still wary of the constant supply.

That's how markets work - the more a zone, or trendline, offers support or resistance the stronger it becomes.

But if the Aussie closes the week up at this level it will be the strongest close on any week since April 22 when the AUDUSD closed at 0.7703.

Naturally the US non-farm payrolls tonight - market expecting 175,000 jobs and a 4.9% unemployment rate - is a big event for the US dollar, markets and by extension the Aussie.

But equally the release today of retail sales for September and the RBA's statement on monetary policy, both released at 11.30am this morning AEDT, are also important.

The RBA is likely to be fairly upbeat about the outlook and settings in the economy. And while the governor again noted that a big rise in the Aussie dollar would complicate the economic outlook taking more interest rate cuts off the table is a net positive to the Australian dollar.

So too is the improvement in Australia's terms of trade, which lessens concerns about vulnerabilities, the overall level of Australia's commodity export basket, the AAA rating, 10-year bond rates at 2.34%, and a cash rate of 1.5%.

If ever the Aussie dollar is going to at least challenge resistance in the supply zone now is the time. I still see the Aussie above 80 cents in 2017. But for now traders are worried about election uncertainty and that is holding the AUDUSD back.

That seems the prudent approach for the moment.

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.