Can it break 76 cents?
That's the question this morning after the Australian dollar was lifted by the tide of mild US dollar weakness last night. And folks, that’s as hard or as simple as it gets this morning after the AUDUSD rally was pretty much in lock step with the move in Euro and some other pairs which all benefitted because the other side of the cross - the USD - was lower.
But, what’s interesting about the overnight move is that the AUDUSD has outperformed both copper in the past 24 hours and the drop back – and underperformance – of metals and mining shares to the total market over the past 36 hours.
They are both important indicators for the Aussie with the metals and mining shares something to watch medium term as they will impact the Aussie if the slippage continues.
But for the moment the dominant themes in developed market forex is the mild dovish tilt, or at least the perception of same, of the FOMC and the market's reaction to the cancellation of the US-NK summit.
So, if the USD is going to drift a little, if the Euro is going to rally a little, then the Aussie dollar will likely go along – perhaps lead – the move higher. As I wrote in my AUD piece yesterday we are currently trading a trend, within a trend, within a trend.
That is it has broken down and out of the weekly uptrend which goes back to the 2016 lows. It is still in a big daily and weekly downtrend from the highs around 0.8135 and it is in an uptrend off the lows around 74 cents a week or so ago.
On the day the high for the week of 0.7605ish looks to be back in the frame and if that gives way it opens the chance of a move toward 0.7660. But if 0.7605 holds firm the bias turns back toward 0.7564, 45, and then 0.7526.
Have a great day's trading.
Chief Market Strategist
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