The AUD/USD Looking to Test 0.6900
Rowan Crosby • 2 min read
The AUD looks like it wants to continue its bull run of recent sessions as we quickly approach the 0.6900 mark.
The reversal that has taken the Aussie to this point has been quite stark, and the move has likely caught many off-guard.
In fact, 0.6800 which was a previous resistance/support level, provided little by way of selling pressure. As such, I feel that 0.6900 could theoretically have even less.
Just looking at the charts, it’s clear that while there is the ’round number’ factor at play here, there isn’t much by way of technical support. 0.6800 was a far bigger level, that proved there was sellers ready and waiting. But they couldn’t hold price down thanks to, at that point, a weak USD.
The reversal has come thanks to a growing belief that the RBA might not be able to cut rates as much as many have predicted. As I’ve mentioned, the risk of reflating asset bubbles, looks to be a real downside.
Clearly their goal remains to be getting inflation back to 2-3% along with unemployment under 5%. We are not far off these points and in reality, changes in monetary policy take time to filter though.
As such we need to look at the possibly of the RBA not being as aggressive as many think and even if they do make further small cuts, they are already well and truly priced.
It is a quiet week across the board in Asia, but we do have some interesting Chinese data, that is worth paying attention to.
CPI has come in above analysts expectations and that will likely see more upside in the Asian pairs today. CPI was 2.8% vs 2.6% expected and PPI was also above consensus.
So far today, we are seeing the NZD/USD really pushing higher, while the AUD is still lingering away, perhaps being held down by sellers, who are nervous about this overextension.
I do feel we are due for a retrace and given that the Aussie is the lagger today, this could be the first sign of weakness.