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Aussie Pushing Higher
The Aussie Dollar continues to push higher today as risk-on trades benefit from a weaker USD ahead of tomorrow’s CPI data. The Aussie has bounced firmly off the .6520 level, boosted by the rally in gold and commodities prices as well as better data out of China recently. Improved factory sector readings and better growth figures have bolstered the view that the Chinese economy is putting in a bottom against the weakness we saw over the end of last year and early this year. This is of course great news for Australia given the level of exports serviced to China.
USD & The Fed
The bigger story for the Aussie currently, however, is that of Fed easing expectations. Despite another bumper US jobs report last week, traders remain highly sensitive to bearish USD risks into tomorrow’s inflation data. The sense now is that the Fed is moving closer and closer to pulling the trigger on easing and is just waiting for CPI to show that it has returned to a downward trajectory after the recent push higher. If tomorrow’s data comes in below forecasts, therefore, we can expect USD to be heavily sold, allowing AUDUSD to breakout to the topside. The FOMC minutes following the data tomorrow are also likely to fall more on the dovish side, further supporting the move.
Technical Views
AUDUSD
With support holding at the .6520 level, the potential for a large inverse head and shoulders pattern remains in place (with .6520 the right shoulder). Near-term, look for a break of .6681 to open the way for a move up to .6587 and beyond.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.