Originally published by AxiTrader
Interest rates or twin deficits?
That's the discussion forex traders are increasingly going to be having in the months ahead as President Trump pushes ahead with his late cycle stimulus and associated borrowing. It's one of the reasons many banks, traders, and investors are still holding a jaundiced view on the outlook for the US dollar.
It's why the US dollar still can't take out 91 in US Dollar Index terms, why the euro was able to hold 1.22 last week and why the Aussie dollar managed to hold support also.
Of course in the Aussie's case, in forex markets more broadly, the turn around in stocks is a key part of the flight higher. Risk appetite hardly ever fails to give the Aussie a lift.
That, when combined with the break of the trendline Friday from the start of the decline above 81 cents along with the reinforcement of the important support zone in the 0.7740/60 region has the bulls back in control at the moment in AUD/USD.
As I wrote yesterday a break of 0.7830 opened up the likelihood of a move toward 0.7893 on the 4-hourly charts.
And with the NAB business survey out today and expected to reinforce the solid business operating environment and outlook right now in Australia there is every chance that the Aussie lifts toward that level.
Whether it confirms or denies the worries which surfaced after the earnings data in the recent US jobs report will set the scene for the US dollar and thus the Aussie.
Have a great day's trading.