The Australian dollar is trading lower today as the US dollar gained some strength over the weekend.
“The Aussie is on the back foot this morning due to a combination of the RBA rhetoric and some strong jobs data from the US last week,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTader.
He said the Aussie dollar fell from its high of .7980 last Friday after the release of the jobs data in the US.
“The US dollar gained a lift from the stronger than expected non-farms print for July. Even if the US rally proves ephemeral there is still plenty of room for it to rally, even as a garden variety move,” McKenna added.
However, he pointed out that despite trading a bit lower today, the Aussie dollar is still being supported above the .79 cents level.
“The latest data shows that big speculative accounts were at their most bullish (about the Aussie dollar) in four years as of last week,” he said.
With a net long of 60,713 positions, the accounts considered as speculators, are at the highest level of longs since April 2013 when the Aussie was trading above parity against the US dollar, McKenna said.
But he said a lot of other factors are weighing on the Aussie dollar at the moment.
“If you consider the technical levels, an RBA that feels the need to downgrade growth if the Aussie dollar nears .80 cents and a turn on the US dollar, it is easy to see why the Aussie is facing some headwinds and feeling the pressure today,” McKenna said.
Reviewing what RBA Governor Philip Lowe said last week about a strong Australian dollar and its potential impact on the economy, McKenna said: “It’s a message to traders and investors that the Australian economy is doing well, will grow near potential, but won’t be heating up fast enough any time soon to warrant rate rises. Especially if the Aussie dollar starts appreciating again.”
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