Aussie dollar on the backfoot


The Australian dollar failed to breach through the resistance level last night and is trading around the .7645 level this morning.

“The Aussie is on the backfoot now. But at 0.7645, it’s not exactly a big setback by any stretch of the imagination,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

He said the Aussie’s move reflects the overall strength of the US dollar against other, non-GBP, majors in the past 24 hours.

The US dollar had a bit of a rollercoaster ride last night when news broke that president Trump was “looking for ways to penalise currency manipulators”.

But on balance it is mostly stronger against the majors, according to McKenna.

“It’s not a big setback for the Aussie dollar bulls. But the risk is of a further drift into month’s end,” McKenna said.

Today is genuinely one of those days when it’s possible to say price action is sometimes just price action. The 40-point range overnight was at the lower end of a usual daily range and that is a continuation of the contraction we are seeing in the average daily range for the Aussie.

Looking at the outlook for the Aussie in the context of current settings what’s clear is that – not to be trite- but the outlook is unclear.

In the meantime, the Mexican peso is still strong holding at 18.68 after the Bank of Mexico jacked rates up another 25 basis points this morning to 6.5%. That’s a high rate but inflation in Mexico is closing in on 5% at the moment.

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