Originally published by AxiTrader
Quick Recap
The US dollar continues to strengthen as the market bond rates rise and the Fed minutes suggest that a December hike is locked and loaded just awaiting the trigger.
That naturally puts a weight on the AUD/USD. So this morning the Aussie is in the lower half of the 75/77 range it has been in recently at 0.7560. But against the major crosses the Aussie dollar continues to remain strong while against the Kiwi it has surged to 1.0735 as the Kiwi collapse continues.
What You Need To Know
The Australian government issued a monster $7,6 billion 30-year bond yesterday to extend the yield curve out to 2047 and provide offshore investors with a great yield in an environment of still very low interest rates.
That the issue yield of 3.27% was above the 3% coupon means any offshore investor not only got the highest AAA rated long bond return on the globe but they also got the opportunity to buy the bond at a discount to face value.
That's a double win for the investor and it might help explain why the Aussie dollar is doing relatively well against the rest of the forex landscape where multiple currencies have been hitting 4-week lows against the US dollar in the past few days.
Naturally that means the Aussie dollar is still pushing higher against the Euro, Yen, Canadian and Singaporean dollars, British pound, and of course the Kiwi.
AUD/NZD has now hit the 200-day moving average and 50% retracement of the move from the April highs which we targeted a few week's back when the overwhelming negativity was for a parity party.
It's starting to look a bit toppy up here. So while I don't have a sell signal yet - I'm taking some position off the table.
Against the Yen the Aussie remains firmly in a strong down channel but there is a strong chance that it heads back toward the top of this channel around 81.80/82 in coming week's.
Naturally the outlook for the Australian dollar against the US and all other currencies is going to be influenced by the release of Chinese trade data today. Just this week we have started to see bulge bracket investment banks upgrade their forecasts for economic growth in China in the year ahead. So if the data supports this more optimistic outlook the Aussie could get a lift.
In AUD/USD terms strong data would push the Aussie back toward the mid-point of this range at 0.7600. Weak data might see the Aussie challenge the base of the current support at 0.7525/30.
Have a great day's trading