Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

The Aussie Dollar Eclipsed Its 2017 High Friday At 0.8135

By Axi (Greg McKenna)ForexJan 29, 2018 11:45
au.investing.com/analysis/the-aussie-dollar-eclipsed-its-2017-high-friday-at-08135-200197245
The Aussie Dollar Eclipsed Its 2017 High Friday At 0.8135
By Axi (Greg McKenna)   |  Jan 29, 2018 11:45
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
AUD/USD
-0.08%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NZD/USD
+0.35%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AUD/NZD
-0.39%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AUD/CNY
-0.05%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AUD/EUR
+0.13%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
USD/CNY
0.00%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Originally published by AxiTrader

The Australian dollar made a new high for this run last week, eclipsing the 2017 high and hitting 0.8135 on what was a wild ride on forex markets. It was all about the US dollar of course, as its chronic weakness became acute after hamfisted - but possibly revelatory - comments from US Treasury Secretary Mnuchin that seemed to cheer US dollar weakness.

Of course, he said what we all know. A country can benefit from a weaker exchange rate. But coming after the imposition of tariffs on washing machines and solar cells and with President Trump still threatening to scotch NAFTA, for many traders Mnuchin's comments seemed to bolster the administration's mercantilist credentials and echo another era in currency markets.

That Commerce Secretary Ross almost instantly tried to clarify Mnuchins comments as consistent with policy, that Mnuchin himself sought to do the same and that President Trump talked of looming strength in the dollar as the US economy strengthens turned things around for the buck on Friday.

But the market's reaction in aggressively selling dollars once again on the back of fairly benign comments from BoJ governor Kuroda that Japan - with a core inflation rate of just 0.9% - that "we are finally close" to the BoJ's 2% target. Shows just how poor US dollar sentiment is right now.

That is why the Australian dollar has been so strong recently.

Indeed the AUD/EUR price correlation over 35 days is now up at 0.9717 (1.00 being perfectly correlated). The AUD/CNY correlation over 35 days sits at an equally high 0.9768. This really is a US dollar weakness driven move.

At 0.8104 this morning the Aussie is only a little off its high in early Asia trade as we await a big week for markets.

Here at home the NAB business survey tomorrow will be interesting as a pointer to the outlook. But Wednesday's release of Q4 CPI could make or break this rally. At least in a relative sense and on the cross rates.

Recall last week's New Zealand CPI printed 0.1% for Q4 against expectations of a 0.4% print. That saw the kiwi collapse and AUD/NZD (among other kiwi crosses) surge.

The market is currently looking for a headline rate of 0.7% and year on year rate of 2%. Any material deviation from that will drive the Aussie.

Likewise - given the correlations - so will the moves in the US dollar and how that translates to other currencies values will drive the Aussie. And on that front I'm watching the USD/CNY rate as much as I'm watching any moves in the euro or the yen.


Anyone who remembers the Chinese decision to devalue the Yuan back in 2015 will remember that at that time the press was full of articles which suggested we may be seeing the start of a "currency war" as this article from Reuters at the time highlights.

Nothing of the sort happened then. And I do not believe anything of the sort is about to happen now from the US or any other nation. What Mnuchin said was hamfisted and he should have known better. But the Administration is aware of its massive funding task and as a result has sought to calm the horses lest it destabilise interest in that new issuance.

But I raise it this morning because at 6.3199 this morning the Yuan is back near the 6.20 level from where it was devalued in 2015. That could be an important point of pushback from Chinese authorities either overtly or by joining the ECB and Boj/Japanese rhetoric which has said the Administrations comments were unhelpful.

That, in turn, could help the US dollar find its footing.

Data, of course, is important as well. And on that front the Fed meeting and nonfarm payrolls along with EU inflation and growth data will be important on whether or not the US dollar can stablise.

Turning to the AUD/USD chart outlook and it's clear that the uptrend remains intact. In fact the Aussie went close to tradinig both sides of the current uptrend channel on Friday after trading both sides over the course of the previous three days trade.

So it's volatile withing this uptrend.

On the week 0.7990/8000 is support while resistance in this trend is currently 0.8146 rising 9/10 points a day.

Longer term 0.8270 is the inside trendline resistance within an overall uptrend from the low back in early 2016.

Here's the daily chart.

Chart
Chart

Have a great day's trading.

The Aussie Dollar Eclipsed Its 2017 High Friday At 0.8135
 

Related Articles

ING Economic and Financial Analysis
Bank Of England Exercises Its Financial Stability Remit By ING Economic and Financial Analysis - Sep 29, 2022 1

Events in the UK yesterday marked the first time this stagflationary macro environment risked evolving into a financial crisis. Fortunately, the Bank of England intervened...

Kenny Fisher
EUR/USD Near Parity, Powell Speech Next By Kenny Fisher - Aug 26, 2022

The euro has posted gains today and briefly punched above the symbolic parity line. In the North American session, EUR/USD is trading at 0.9978, up 0.11%.German Business Confidence...

The Aussie Dollar Eclipsed Its 2017 High Friday At 0.8135

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email