Originally published by AxiTrader
The Australian dollar is this morning trading at 0.7772, up 0.58% on where it was at 9am AEDT yesterday.
That increase of 0.58% makes the Aussie best performer of the major traded global currencies. But it is not alone in its strength as the pound is back at 1.34 and the euro just under 1.19. Likewise, the commodity bloc is generally higher with the kiwi up 0.41% to 0.7066 and the Canadian dollar up 0.35% as USD/CAD trades down to the bottom of the recent range at 1.2541.
All this means that the Aussie dollar has had the important breakout from the 0.7727/31 region I highlighted yesterday which opens the way to 0.7803 and potentially a move back to 79 cents in time.
For the moment the Aussie's rally is on the back of a combination of a weaker US dollar and a coincidence with stronger copper prices which have rallied for the last 15 days.
Regular readers know I use a 10-minute copper price move as a very short-term directional indicator for the AUDUSD. But there is also a very long run relationship between the Australian dollar and copper - both are seen as beneficiaries of and proxies for global growth.
So the coincidence of strength in both copper and the Aussie, along with the improvement in mining shares suggests that there is a rerating of the outlook for global growth - or at least a rotation away from 2017's winners as traders position to take advantage of what looks like a very solid 2018.
I won't belabour the point, in many ways yesterday's AUD/USD piece was an outlook for 2018. So if you are interested in more on this theme you can read that here.
In the meantime, to the price action.
And, the break of the resistance zone is clear. As was the move above the 200 day moving average last week. Equally though with thestochastic in overbought territory and the Aussie having pushed outside the daily Bolly Band up here in the high 0.7770's it might be time for a pause and consolidation of these breaks and this move.
That's what we've seen from copper over the past 24 hours and it could be a good lead for the AUD/USD in the day ahead.
Very short term this rally is supported by quite a steep trendline which comes in around 0.7720/25 over the next 24 hours which again highlights that region (yesterday it was 0.7727/31) as an important level to watch. If that breaks then 0.7673/85 becomes support.
Here's the chart:
Topside the bias suggests a move to 0.7803 and possibly 0.7873 is on the cards.
Have a great day's trading.