The Aussie dollar dismisses three data point misses to close at a 2017 high

FacebookTwitterGoogle+PinterestTumblrStumbleUponRedditLinkedInDiggVKShare

The Aussie dollar has launched into the highest close for 2017 off the back of US dollar weakness.

 

“Three misses in a row and off important data points – GDP, retail sales, and trade – had the Aussie on the back foot yesterday, but the low of 0.7974 was coincident with an offered tone coming into the US dollar,” said Greg McKenna, chief market strategist at FX and CFD provider AxiTrader in Sydney.

“Euro buyers positioned themselves ahead of the ECB decision and Mario Draghi’s press conference which led to the Euro dollar’s volatility and a big Aussie dollar range in that short space of time.”

It is clear to note that the mindset of Aussie dollar traders has changed and the market is well and truly supporting the Aussie dollar on each pullback.

“But at the end of New York trade, and as we open in Asia the Aussie dollar is sitting at 0.8045. That’s just 20 points below the high of the year and right on the upper edge of the uptrend, the Aussie dollar has been in since mid-August.”

McKenna added, “It is clear that buyers have continued to support any dips in the Aussie dollar. That’s much because of recent local economic strength. It’s also because metals prices have been strong, global growth likewise, and the Aussie US bond spread has been moving in the Aussie dollar’s favour.”

How much has the US dollar weakness contributed to the Aussie dollar move higher?

“But there is little doubt that the US dollar is also an important input into the strength of the Aussie – it is the other side of the Aussie dollar cross after all,” cautioned Greg.

READ  THE ULTIMATE STUDENT’s DISCOUNT PROMOTIONS, DEALS AND DISCOUNTS FOR STUDENTS OF UK AND FRANCE

“So with that in mind it is worth noting that if Euro trades up and through 1.21 and USDJPY trades down and through 108 – especially on a weekly close – there is every chance that the next leg of a big US dollar fall will have begun.”

Traders will be watching key technical levels along with key economic data today

McKenna added, “On the day though the overhead resistance is something that traders will be watching along with the release of Australia’s housing finance data for July (+1% expected) and Chinese trade data – especially imports and exports – will be important.”

Over to the key technical points to watch, Greg said, “On the daily charts, the focus is the recent high at 0.8065. AUDUSD is outside the top of the Bollinger Bands which is normally a sign for a pause. But as I wrote yesterday and the day before. A break of 0.8065 gives me a Fibonacci projection of 0.8330 – especially if it’s on a weekly close.”

********

About AxiTrader

Back in 2007, AxiTrader was founded on a simple idea: to be the broker we’d want to trade with. We’ve since grown to become one of Australia’s largest and leading Forex brokers.  Investing in over-the-counter derivatives carries significant risks and is not suitable for all investors. You could lose substantially more than your initial investment.



This post has been seen 645 times.