Originally published by AxiTrader
No the headline is not a typo. And yes the Australian dollar has climbed off the mat this week.
That means that this morning as I write the AUDUSD is sitting at 0.7560 up 0.48%. Likewise, the Aussie is stronger on the crosses. EURAUD is down 0.65% at 1.5533, GBPAUD is off 0.65% at 1.7613, and AUDJPY is up 0.41% at 85.80.
Even AUDNZD is higher, just, at 1.0897 after a rise of 0.14%.
How and why the Aussie is rising isn't difficult to understand really. I can simply look at my 10 minute Shanghai copper chart over the past couple of days to get a feel for the short term Aussie dollar rise being driven by the improved sentiment in metals markets so far this week.
iron ore? Not so much.
But I find the very short-term relationship between the direction of 10-minute copper and the Aussie dollar instructive for the direction of prices.
And, and, and as I write this morning the Australia-US 2 year bond spread is marginally -tiny - positive even though the data is still on the weaker side of the ledger.
So some small positive signs.
But I don't want to over egg it because I think what's going on here is that in the proximity of the two-year uptrend line, and after a pretty big fall what's going on the Aussie at the moment - and in the US dollar more broadly agaist the euro and other pairs - is that we have a lack of sellers while folks wait for the FOMC and the next shoe to drop.
Let me explain.
Last night, driving down from Port Stephens to the office here in North Sydney I was listening to an old podcast where Michael Covel spoke to legendary market timer and indicator builder Tom DeMark. It was a long and at times rambling conversation. But DeMark made a really good point about when and how markets top and bottom.
DeMark said it's not the sellers who mark a top, nor is it the buyers who mark the bottom. It is, respectively, the absence of buyers and sellers which creates the turning point. I agree with him wholeheartedly on that point. And it is a point which is as true in 5 and 15 minute time frames as it is in daily or weekly timeframes.
Put simply then the Aussie is higher because the sellers stopped belting it. Just like they have stopped selling copper when it fell to $2.93 a pound and as they have stopped selling the US dollar as we all await the Fed.
That said, my guess is also that the bid for Westfield Corporation (AX:WFD) announced overnight might have provided a little support as well.
To the charts then and I've adjusted the angle of the daily down channel a bit. That's cheating. But I've done that to highlight a level which might become resistance on this rally if folks draw the lines to connect the 81 cent level and recent high around 0.7650/60.
The means resistance sits at last night's high around 0.7580 and then this new trend line around 0.7605/10. I wouldn't expect the Aussie to be able to break up and through these levels today. That said though I got a lot of Australian dollar buy orders on the Aussie crosses yesterday and I'll get an actual AUD/USD order today.
Whether it is filled is another thing.
On the downside support is 0.7533, 0.7518, 0.7500/05 and then the trendline around 0.7490/95. 0.7480 is the level I'm watching. If it broke it would be confirmation of a big move lower.
Here's the chart:
Have a great day's trading.