The Australian dollar remains under pressure and is trading below .76 cents this morning.
“US Fed chair Janet Yellen is clearly signalling that the Fed is on track to raise rates, not just once but maybe 3 times this year,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“And that is good news for the US dollar,” he added.
However, McKenna pointed out that the greenback was not able to maximise the boost it got from Yellen’s statement. It (US dollar) still failed to hold above the 102 level in US dollar index terms.
Regarding the Aussie dollar, McKenna said it’s not only the relatively strong US dollar that is weighing on the local currency.
“At the moment, the Aussie dollar is being weighed down by the level of speculative longs,”
According to McKenna, the latest figures from the Commodity Futures Trading Commission (CFTC) indicate that any selling on those long positions may weigh on the Aussie dollar.
At the same time, McKenna noted that the Aussie is lagging behind other currencies including the Euro and the Japanese Yen.
There is little chance that is because of tomorrow’s Reserve Bank of Australia (RBA) board meeting and governor’s statement.
“No one really expects the RBA to ease and if anything the bank’s upbeat outlook for the economy has been vindicated by the bounce back in Q4 GDP,” McKenna said.
“So, there is every chance an upbeat statement and no change in policy is Aussie dollar supportive.”
“At this stage, the Aussie’s moves and the fact that is lagging behind other currencies all point to the fact that it (Aussie dollar) is clearly under pressure,” McKenna said.
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