The Australian dollar is back near the highs for the month sitting just below the supply zone at 77 cents.
“The Aussie is like the little engine that can – and it is up strongly and trading at .7692 cents level this morning,” said Greg McKenna, chief market strategist at FX and CFD broker AxiTrader.
“So far the 77 cent level is a high hurdle and a bridge too far for the Aussie dollar, but unless something happens to strengthen the US dollar, the preconditions for a break and run higher are growing.”
According to McKenna there’s a number of factors supporting the Aussie dollar that includes: improving commodity prices, stock prices holding firm, Australian economic growth remaining robust and the overall risk appetite in the market which looks pretty solid.
“If you step through arguments, most people would say why should I sell the Aussie dollar? And the answer is I shouldn’t,” McKenna said.
At the same time he pointed out OPEC’s deal last night which is equally supportive for the Aussie dollar.
“As we all know commodity currencies benefit when commodity prices improve,” McKenna said.
“So far this year we’ve seen signs that the secular collapse in commodities that relate to Australia may have ended and the cycle has turned,”
“So if OPEC can change the outlook for oil and drive it back into the mid $50 or low $60 a barrel region over coming months then this will reinforce the positives for the commodity complex including the Aussie dollar,” he said.
According to McKenna, “At the moment, the only really reason that might give the sellers a reason to unload the Aussie is the convergence of overhead resistance at the .77 cents level.”
“That’s one factor among the Aussie bulls that is making traders and investors leery of buying what might be the top right here at the moment just under 77 cents,” McKenna said.
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