The Australian dollar had another buffeting overnight but remains unchanged just below the .75 cents level.
“The Aussie was able to hold its ground amid a stormy session overnight,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“It’s largely unchanged now at .7496 on the back of a rally in gold and waning risk appetite among investors,” he added.
McKenna noted that increased geopolitical tensions in North Korea and Syria saw the Volatility Index (VIX) rising overnight.
“The rally in gold and the surge in volatility index all suggest that investor appetite has fallen,” he added.
At the moment, he said the Aussie dollar has to break through the .7550 level to reverse the short-term negative outlook.
Based on the charts, McKenna said the Aussie’s movement overnight showed “it fell hard and fast.”
“But it’s no real surprise that it again found support just above the 0.7470 level.”
He added, “I doubt very much that the Aussie found support because of the NAB business survey yesterday – the hourly charts suggest the Aussie lifted as the US dollar came under a little pressure – but the survey was a boomer.”
According to the NAB survey, business conditions hit their highest level since the GFC of +14.
“That suggests that the Australian economy or at least Australian business is in extremely good health as we head toward the second half of 2017,”
McKenna also pointed out comments from NAB chief economist Alan Oster who said March’s result reflects that “conditions have improved almost across the board to levels that suggest a strong economy in the near-term. That includes WA, which has been looking better of late and suggests the worst of the mining downturn may be behind us.”
“It is a great mitigant to my concerns about the outlook for the domestic economy. And my premise is that where business goes so goes its employees in terms of the outlook they take toward the economy,” McKenna said.
“So there is every chance a fair chunk of the population is getting positive feedback on the outlook from their bosses and managers,” he added.
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