Originally published by AxiTrader
The Aussie dollar has done extremely well in the past 24 hours recovering from a Gary Cohn resignation and weaker than expected GDP induced low of 0.7771 to sit at 0.7819 this morning.
That's down just 0.1% on where it was at 9am yesterday morning.
Naturally, like a souffle, the Aussie has risen with the increase in risk appetite as stocks recovered from their Asian trading lows. But even against that backdrop the rally the previous night and the recovery again in the past 12 hours or so shows a curious level of support for the Aussie given that iron ore prices have been falling this week and yesterday's Q4 GDP was a significant miss with a print of 0.4% which dragged the year on year rate down from 2.9% to 2.4%.
For context EU data last night showed growth in Q4 2017 of 0.6% and year on year growth of 2.7%. Europe folks. Europe.
So as the RBA governor said yesterday the central bank is in no hurry to move rates anytime soon even though Phil Lowe says the most likely next move is higher.
What's really important about where the RBA is and where Australian growth sits is that yesterday's release showed that while growth was fed by household consumption the overall backdrop again deteriorated with per-capita growth falling again.
That speaks to a bigger pie but lower quality ingredients. And that means Australian households remain under a little bit of pressure. Which no doubt is why the RBA governor dropped his reference Tuesday to 3% growth in coming years and simply said growth in 2018 will be better than 2017.
But will it? That's the question.
In the meantime, though Aussie dollar bulls have the Con and we have another of those very long-tailed candles which speaks to their ascendancy over the bears right now.
Looking at the charts the big test of the bulls resolve is likely to be the 0.7850 level initially. That's where a tentative - two touch - daily trendline comes in and it's also the 50% retracement level of the recent sell-off.
A break of that level would suggest a move to 0.7882 which, if broken could precipitate another 100 point rally. Support is 0.7787/92 and then yesterday's low. A break of the latter could open a move back to 0.7728.
Have a great day's trading.