Originally published by AxiTrader
All eyes are on the pound as the results flow from this much closer than expected UK election.
And amid the uncertainty the potential upset has caused in early Friday trade the Aussie dollar is a little lower this morning sitting at 0.7532. That's just above the low it traded to yesterday when Australia's trade data printed a lower than expected $555 million surplus.
Yes that's a surplus, not a deficit. So it's not a bad number at all. And the big miss was because of weather-related interruptions to coal exports in the wake of Cyclone Debbie's battering
So it's not a bad number at all. And the big miss was because of weather-related interruptions to coal exports in the wake of Cyclone Debbie's battering of the Queensland coast earlier this year.
That helps explain why the buyers were still there at the 200-day moving average yesterday around 0.7526.
And of course China’s trade data yesterday was a cracker easily eclipsing expectations with a big lift in both exports and imports. At first pass traders and investors look to a lift in both sides of the trade ledger as a sign that the Chinese and global economies are doing well. So that’s positive for risk assets like stocks, and the Aussie dollar, and feeds back into metals like copper. The data showed (in yuan terms) that exports rose 15.5% yoy in May from Aprils 14.3% pace. Imports were 21.1% higher from Aprils 18.6%.
But the rally stalled in the mid 0.7550's as traders awaited the triple treat of the ECB, James Comey's testimony, and the UK election result.
James Comey and the ECB combined to give the US dollar a little better bid while the present indications that the Conservatives are in real strife and could lose their majority in the Commons has added a little weight to that bid.
So it's no surprise the Aussie is back at yesterday's lows. It almost never does well at times of uncertainty. And that weakness may continue based on my reading of the charts.
Yesterday I wrote that "Short term the 4-hour charts for the AUD/USD look like they might be turning for a run back toward 0.7620/25 while below last night's high at 0.7566". We essentially saw that yesterday and the break of the short-term uptrend line, and failed retest overnight, suggest that the Aussie is biased back toward 0.7490/92 in the first instance.
Here's the 4-hour chart - a move below 0.7523 would be the signal the move is on.
After a good rally this week - some deck clearing before the week's end wouldn't surprise.