Bullish Reversal in AUD/USD but Buyers Have Obstacles to Overcome
As risk appetite in financial markets increases, while stock markets have turned bullish since the end of October and bond yields declined, commodity dollars have made a significant upward reversal, which continued for nearly a month. The decline in Moody’s forecast for the US sovereign debt earlier this month and the softer US inflation figures for October are weighing on the USD, while improving risk sentiment, which is benefiting the Aussie.
Positive remarks made by RBA Assistant Governor Glenn Stevens last week helped the AUD, while today we had a speech from the Reserve Bank of Australia governor Bullock, who participated in a panel discussion titled “State of the Economy” at the Australian Securities & Investments Commission Annual Forum, in Melbourne.
The Assistant Governor hinted that it would be harder than expected to lower inflationary pressures in Australia. Similar to the US, Australia has had high inflation primarily and a tight labor market. Money markets have kept the door open for another interest rate increase in 2024 while investors wait for fresh data, such as the Australian Purchasing Manager Index (PMI) data and US Jobless Claims data will be released at midweek.
With the US Dollar (USD) has eased back across the market and providing the Australian dollar (AUD) some breathing room, AUD/USD has increased by more than 0.5% yesterday, closing above 0.6550, while decisively breaking above the 100 SMA (green) on Friday. The Antipodean is continuing its upward trend of late, climbing to its highest offers since July.
Above the 0.6520 mark, buyers are in charge, and a move back below that mark would cause some fear for the buyers on the break. The next significant target, around 0.65824, would be a move near the 50% retracement of the decline from the July high to the October low. The important 200-day moving average is located at 0.65914, above the midway. Since July 31, the AUDUSD’s price has not moved above its 200-day moving average.
AUD/USD Live Chart
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