Originally published by AxiTrader
Key Takeaway
The Australian dollar remains under 76 cents against the US dollar this morning.
At 0.7579 it's both off Friday night's low around 0.7557 and 0.2% below Friday's close of 0.7594.
So the Aussie remains pressured potentially weighed down by positioning that has seen speculative longs grow to their highest levels since the failed run above 78 cents last year.
What you Need To Know
The US dollar's reaction to Janet Yellen's confirmation not only that March is on the table but that "given how close we are to meeting our statutory goals, and in the absence of new developments that might materially worsen the economic outlook, the process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016" (my bolding) was somewhat surprising on Friday.
She is clearly signalling the Fed is on track to hike the 3 times it suggested for 2017 back when it last moved rates in December 2016.
But the US dollar still failed to hold above the important 102 region in USD index terms. Euro is back above 1.06 this morning while the Yen has pushed USD/JPY back below 114.
What's important about those yen and euro moves is that it means the Aussie is lagging - and thus losing on the crosses.
So the Aussie is lagging a little.
There is little chance that is because of tomorrow's RBA board meeting and governor's statement. No-one really expects the RBA to ease and if anything the bank's upbeat outlook for the economy has been vindicated by the bounce back in Q4 GDP - released last week.
So there is every chance an upbeat statement and no change in policy is Aussie dollar supportive.
Rather the Australian market is weighed down by the level of speculative longs which hit the highest level since last May data released by the CFTC on Friday night showed.
That total of 51,915 net long positions by traders on US futures markets the CFTC identifies as big speculators is the longest since the AUD/USD closed at 77.46 cents in late April 2016. That was after it has traded to a high of 0.7840 on that run.
That Friday's data from the CFTC reflects positions as at the close of business in the US on Tuesday last, suggests there has likely been some selling from these accounts which has weighed on the Aussie.
So on that basis and because the Aussie is lagging the US dollar index, euro, yen, and Canadian dollar this morning it seems clear the pressure remains on it.
That's something the charts tend to suggest as well.
The AUD/USD didn't fall as far as the 38.2% level around 0.7515/20 on Friday night having exploded out of the bottom of the Bollinger Bands, which suggested an element of "oversoldness" short term.
But this level remains the key focus and a test toward that zone would usually accompany such a strong rally that the Aussie has, still, seen from the lows of 2017. That's in the sense that 38.2% retracements are what I'd call "garden variety pullbacks". They're the ones that replicate in multiple markets, over multiple time frames, over hte multiple years - decades, of my career.
Anyway here's the AUD/USD from my AxiTrader MT4
