The Australian dollar found support and clawed its way back to the 75 cents level this morning.
“There hasn’t been a lot of big moves among the major currencies, so it is good to see the Aussie regaining support,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
He added, “It (Aussie’s support) could be a reflection of the US dollar or maybe some foreign buying fuelling the stellar run on Australian stocks. Either way, there are signs that the Aussie could bounce a little to test the resolve of the bears.”
According to McKenna, when the Aussie hit a low of .7475 cents yesterday, buyers moved in swiftly and pushed it back higher.
“That suggests genuine buying from those watching the support level I highlighted earlier,”
“Yesterday I said the Aussie is at risk of an utter capitulation. For the record it still is, but it likely needs to pause and bounce a little before it has another test of support,” McKenna said.
This set up makes the release of the NAB business survey more important than normal.
According to McKenna, he holds the NAB business survey as the most important economic release in the nation each month.
After a boom in conditions and confidence a few months back, business has reported some pullback in ebullience in both these headline indexes as well as trading and profitability. But the overall recent results have remained solid.
“I’m sure the RBA and forex traders will be wondering if that remains the case when the data is released this morning,” McKenna said.
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