Originally published by AxiTrader
The Australian dollar's recovery continued into week's end even as the Euro and pound remained under pressure.
It's sitting at 0.7530 off last week's low of 0.7472 which just a smidge below the important 0.7475/80 region I had identified for some time as the key level to watch and support which - if broken - would open up a cascade lower.
That it held is important. That the Aussie is also off its highs of Thursday/Friday at 0.7560 is also important. But as I wrote in my morning note earlier fundamentals and policy divergence matter at the moment and last week the Citibank Economic Surprise Index for Australia improved from -30.7 the previous week to - 8.2 on Friday.
Associated with that was the solid trade data, while the upbeat RBA in both the Governor's speech Tuesday night and the SoMP Friday have also helped.
That's not to say the worm has turned for the Aussie dollar. But it might be time for a bounce after the recent weakness.
Looking ahead the Federal Budget tomorrow night there is a reasonable chance it is also seen as a positive for the AUD/USD. It’s a document that usually doesn’t impact markets that much but it is likely to reflect a positive backdrop for the economy and the government's finances.
But before we get that tomorrow night the NAB business survey will be out. And it should be solid once more.
Price action wise the Aussie looks like it is building a base and we might see a decent recovery toward 76 cents, maybe higher in the days ahead.
Here's the chart, a break of 0.7560 would pen 76 cents and above that it's 0.7635/40 and 0.7680. Support is 0.7490 and then 0.7470.
Have a great day's trading.