Aussie dollar hangs tough above .76 cents level


The Australian dollar is hanging tough at the .7650 level amid all the global uncertainties.


“The Australian dollar is more than just the exchange rate against the US dollar. But, it’s the AUDUSD that everyone focuses on at times like these when uncertainty rises and risk goes off,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

According to McKenna despite all the signs of market jitters – Japanese Yen is stronger, US stocks are down and gold has been rocketing higher – yet the Aussie dollar sits in the middle of the .76 cents region.

“Tough as old boots and showing little signs of the usual fatigue that envelopes it when global markets get into a spin,”

According to McKenna, the strength of the Aussie dollar comes on the back of the weakness in the greenback.

Given that the United States is the fulcrum of the current turmoil and as such the weaker US dollar is holding AUDUSD higher.

He added that another factor in favour of the Aussie dollar is the fact that traders and investors across the globe have recently had to recalibrate their estimations of “fair value” for the AUDUSD.

“There’s a bevy of positives surrounding the Aussie at this stage. The RBA has signaled it is now on hold, some Chinese data are printing better, and Australia’s triple-A rating,”

“If you consider all these, you get a currency that even with the current turmoil looks like a port in a storm,” McKenna said.

With the US election only a few days away, McKenna said, “If there is a Trump victory and markets go south is it necessarily true that the Aussie will break down and through the bottom of the recent 0.7450/0.7750 range?”

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“I’m not convinced. Certainly, a breach of 0.7450 would usher in a big fall. But for the moment while this is a Unites States based crisis it’s the US dollar that will wear most of the pain and the Aussie dollar will remain reasonably well supported,”

“If Clinton wins the risk on move in markets could see the Aussie dollar challenging range highs once again,” McKenna said.

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