Originally published by AxiTrader
Quick Recap
The Australian dollar continues to hold firm up near 77 cents and even managed a brief foray into the supply zone making a high of 0.7707 in the immediate aftermath of news breaking that FBI director James Comey reaffirmed his agency retains the view it came to in July. That is Hillary Clinton won't face charges.
But again the supply zone is just a bridge too far for the bulls and the AUD/USD is back at 0.7678 as I write.
What You Need To Know
There are a lot of positives for the Aussie right now as we've been discussing recently.
That is supporting prices up here, right underneath this tough supply zone. But again this morning we saw that the bulls remain cautious when it gets back above 77 cents.
That is the way of resistance and support zones. The longer they hold the more they hold because the more that other traders are watching them and emboldened to sell (at the moment) or buy in the case of support.
The question of what will shake the Aussie out of the overall 0.7450/0.7750 range we've seen for the past few months is a good one.
My bias is that the Aussie will be trading above 80 cents in 2017. So comments from Chinese Premier Li in Riga over the weekend that the government is committed to moderately high growth rates and economic transformation are again encouraging for the view that commodities could surprise by not collapsing the way many think it will.
That will continue to support the Australian dollar.
But we have to get past this election first.
The rally in the US dollar against the majors, the strength in the Mexican Peso, and the anticipated rally in Asian stock markets and US stock futures today is a strong positive for risk appetite.
It's the weakness in sentiment that has accompanied the uncertainty around the election which has been a big hand brake on the Aussie dollar's rally - even with a weaker US dollar.
So a positive resolution - that is if Clinton wins and the market cheers - will lift that weight from the Aussie. But it will also support the US dollar so the Aussie rally is most likely to be seen in the crosses.
But it is worth noting that until this morning the election was being characterised as being too close to call - even if Hillary Clinton had her nose in front. So any really late polls will be important for traders.
And the risk is still high that FBI director Comey's late intervention to say no case for Clinton doesn't balance out his earlier recognition that he was re-examining emails.
That's a risk for markets, and it's a risk for the Australian dollar. It's also why I'm going into this election flat - with no trading positions.
Have a great day's trading