Originally published by AxiTrader
I read a headline this morning that the Australian dollar was higher on the back of yesterday's Chinese data.
Do you think?
Maybe, the data was not terrible. And it did seem to confirm that we'll see another year of 6.5% plus growth in Australia's biggest export market.
But the fact the high in the Aussie overnight was timed almost exactly at the same point the US Dollar Index hit its low suggests the move is, and was, really just about the US dollar.
As I wrote earlier in my Markets Morning piece, sometimes I get completely out of sync with a currency. Now is such a time with the Australian dollar where I am baffled by the source of the strength that saw it lift to 79 cents two nights ago and then 0.7915ish again overnight.
The fundamentals, things like commodity price moves, bond spreads, and risk appetite, don’t seem to support this constant level of support the Aussie has garnered recently. But support is what the Aussie certainly has had.
And as the other side of the cross we can never dismiss the US dollar as a driver of the Aussie dollar. But if this mini-bout of risk aversion turns into something more meaningful expect nothing to support the Aussie dollar – especially against the yen.
Which brings me to the chart for today.
What we see on the daily is proper long-tailed ugliness where the bears chased the bulls back so that the AUD/USD finished at bottom third of the candle. It's at 0.7872 now and if it trades down and through 0.7868 it looks - on the 4 hours - like it is heading back toward support in the 0.7840/50 region.
If that breaks it's 0.7800/05.
Resistance is 0.7915, 25, and then 75/85.
Have a great day's trading.