The Australian dollar is trading lower – around the .7543 level this morning as markets keep an eye on the US jobs markets data tonight.
“The Aussie dollar didn’t follow the stocks which recovered overnight, so there’s a bit of inconsistency there,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“But it’s understandable as traders and investors reassess the whole Trumponomics trade,” he added.
At the moment, the markets are fixed on the release of the US non-farm payrolls and the upshot of the meeting between presidents Xi and Trump.
“The Aussie is looking vulnerable at the moment, and a lot depends on the jobs data tonight,” McKenna said.
According to McKenna, the fact that Larry Fink, the CEO of the world’s biggest investor – BlackRock, has added his voice to the Fed’s on stock market valuations, is just the latest indication that the Australian dollar is vulnerable if investors across the globe begin to reassess the positives that drove it above 77 cents again recently.
He noted that the potential recalibration of the outlook for stocks, bonds, commodity prices, US and global growth will have a necessary corollary in a recalibration of the fair value for the Australian dollar.
“If we are seeing a recalibration then buyers won’t feel the need to chase the Aussie higher. They can sit back and wait,”
“See where the Aussie drifts to, and then reassess. In this environment, the bears don’t even need to hit the Aussie hard for it to fall. All that is necessary is a mini-buying strike,” he added.
From his point of view, McKenna said the recent slowdown in global economic data beats – suggests caution remains the right play in the Aussie dollar right now.
“It feels like the Aussie remains pressured and could still head lower,”
“Importantly though whatever side of the 0.7550 200-day moving average the Aussie closes at week’s end tonight after non-farm payrolls is going to be important in setting the tone over the next week and beyond,” he said.
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