Can the Aussie dollar benefit from a weak US greenback?

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​​​The Australian dollar bulls managed to win over the bears to push the currency higher over the weekend.

“Eventually, the bulls won (over the bears), but the Aussie remains within its downtrend,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

Given the relatively quiet week in terms of domestic data, McKenna said: “Traders will be watching whether the US dollar’s weakness will be enough to lift the Aussie up and out of the downtrend, or, whether lower levels beckon once more.”

He noted that there are many currents running through the Aussie dollar at the moment.

“It is losing ground on the crosses which suggest that there is an overall level of negativity toward owning Aussie dollars on a portfolio basis,” McKenna added.

According to McKenna the turn in prices and sentiment toward iron ore – which hit a 2 week high on Friday – and base metals at the moment, may provide support for the Aussie dollar.

“A bounce in Australia’s key exports – Newcastle coal has also turned around – is a net positive for the Aussie,” he said.

The Aussie dollar is sitting around .7451 this morning on the back of a weak US dollar

“The question for the bulls and the bears now is whether further US dollar weakness, which I expect in time, can lift the Aussie higher,” McKenna said.

The jury is out, but if the Aussie can trade up and through 0.7470 it will be a sign that the bulls are in the ascendancy and a run to 75 cents and then 0.7550/60 – where it should pull up- is on again, McKenna added.The Australian dollar bulls managed to win over the bears to push the currency higher over the weekend.

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“Eventually, the bulls won (over the bears), but the Aussie remains within its downtrend,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

Given the relatively quiet week in terms of domestic data, McKenna said: “Traders will be watching whether the US dollar’s weakness will be enough to lift the Aussie up and out of the downtrend, or, whether lower levels beckon once more.”

He noted that there are many currents running through the Aussie dollar at the moment.

“It is losing ground on the crosses which suggest that there is an overall level of negativity toward owning Aussie dollars on a portfolio basis,” McKenna added.

According to McKenna the turn in prices and sentiment toward iron ore – which hit a 2 week high on Friday – and base metals at the moment, may provide support for the Aussie dollar.

“A bounce in Australia’s key exports – Newcastle coal has also turned around – is a net positive for the Aussie,” he said.

The Aussie dollar is sitting around .7451 this morning on the back of a weak US dollar

“The question for the bulls and the bears now is whether further US dollar weakness, which I expect in time, can lift the Aussie higher,” McKenna said.

The jury is out, but if the Aussie can trade up and through 0.7470 it will be a sign that the bulls are in the ascendancy and a run to 75 cents and then 0.7550/60 – where it should pull up- is on again, McKenna added.

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About AxiTrader

Back in 2007, AxiTrader was founded on a simple idea: to be the broker we’d want to trade with. We’ve since grown to become one of Australia’s largest and leading Forex brokers.  Investing in over-the-counter derivatives carries significant risks and is not suitable for all investors. You could lose substantially more than your initial investment.



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