As they say, a rally is a rally, is a rally.
And the Australian dollar has rallied 0.3% to 0.7527 this morning where it is around the middle of the past 24 hours range of 0.7504/0.7544. In the grand scheme of things though the move higher is no big deal really, just daily noise. And even then, not a lot of noise given the 40 point range is inside the 20-day ATR.
But the Aussie is higher and for now, it is above the very important two-year trend line which comes in around the 0.7490 region.
Whether it can stay there on the day will be influenced by the release of the release of the HIA new home data, house prices and more significantly the NAB’s monthly business survey.
While the headline confidence number always seems to garner the most attention when the NAB’s survey is released, it is the conditions component and the associated trading and profitability sub-indexes which I look to first. And on that front, it’s worth noting that after the record print of 21 last month for conditions there is every chance we see a retracement in this print.
But we’d need to see a wholesale deterioration to change the overall outlook for business. Keep an eye on trading, profitability and employment as well.
Kiwi and NOK
As the Kiwi and Norwegian Krone (NOK) showed yesterday with no real all-encompassing narrative for forex markets at the moment particular events and news can impact on any pair. Yesterday’s announcement of Adrian Orr as Reserve Bank of New Zealand (RBNZ) governor and the miss on Norwegian inflation both ignited big moves.
In the case of USDNOK, it was a big fall to 8.3780 as the Krone lost 0.95% against the USD. For the Kiwi, it was a rally of 1.04% to 0.6908 after the Orr announcement.
That meant AUDNZD fell out of bed a little with a loss of 0.76% to 1.0892. !.0820/30 needs to now hold to avoid a deeper retracement. If it does, the Aussie can play a little catch up (or indeed that would be the result of that catch up).
Turning back to the Aussie now and the key level remains 0.7490/92 trendline support. It’s a long line so I’m giving it some room and suggest a break of 80 might be what it takes to see a deeper move.
Inside that, yesterday’s low at 0.7504 will be support with 0.7544 resistance before 0.7550/60 which was support on the way down to these levels. Above that, it is 0.7590/0.7600.
In other forex market news, what a messy world forex trading is at the moment. That means there are plenty of opportunities but there is no overarching narrative at the moment as each pair maps out its own course. Naturally the Pound is dominated by the Brexit tooing and froing, the Euro is like a spoilt child that can do no wrong, and the Yen could be much weaker against the USD were it not for the hints the Bank of Japan (BoJ) has been giving about changed policy – not to mention the USD can hardly take a trick at the moment.
In some ways that is the narrative. While US stocks just keep powering on the US dollar is not feeling the love for a strong economy, positive outlook, and growing sense that the fed may need to either increase the number or pace of rate hikes in 2018. It will be interesting to see what the Fed does and says and then the reaction Thursday morning in forex markets.
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