The Australian dollar is trading higher this morning on the back of the US dollar’s weakness overnight.
“But despite the greenback’s weakness, the Aussie dollar still has its deficiencies,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
Looking at the day ahead, McKenna said the Chinese data –manufacturing and non-manufacturing PMIs, plus the mood of Chinese metals and iron ore traders will be of vital importance for the Aussie dollar.
“Given the overall negative tone that has emerged toward the outlook for Australian growth and the Aussie dollar, there appears to be an asymmetric risk around negative Chinese data,” McKenna noted.
However, he pointed out that the release of the retail sales figures tomorrow will be watched by forex traders very closely.
“It’s a relatively quiet day for local data today, but tomorrow’s latest update of retail sales is going to be a big release for forex traders,” he said.
The key support level for the Aussie remains in the 0.7400/20 region with resistance in the 0.7500/20 region.
“Either side needs to break to kick the Aussie into the next range,” McKenna said.
In other forex market news, the British Pound is also under pressure as polls show UK Prime Minister Theresa May looks set to miss out on a clear majority in the Commons.
According to McKenna, the reality is the vagaries of polling, the efficacy of their processes and the flow of the results is going to drive GBP over the next week.
“As traders, we can’t do anything about that. But it does seem – and this morning’s price action suggests – uncertainty is growing. And that’s making traders nervous and a little skittish,”
“We can’t really know how the polls will flow or how the election will play out but we can look to the price action as a guide,” he said.
The Pound is of half a percent in the last half hour to 1.2792. and are up on the day.
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