Australian Dollar Traders Are Waiting For The Next Shoe To Drop
Axi | Feb 21, 2017 10:27
Originally published by AxiTrader h2 Key Takeaway/h2
The RBA minutes to be released today are unlikely to provide any shocks given the governor and the bank have already had multiple opportunities this month to give the market their view on the economy and its outlook.
So with the minutes unlikely to be a catalyst for a run, and hold, above 77 cents traders will wondering what's next for the AUDUSD.
The answer, I guess, is more of the same as the AUD/USD remains trapped in a broadish 0.7580/0.7720 range.
h2 What You Need To Know/h2It might seem weird for someone who thinks the Aussie dollar will trade above 80 cents this year to say it is at risk of going down at the moment. But that's the reality of the type of moves we see in markets and in the Aussie dollar all time.
I say that because presently it feels like all the good news might be baked into the cake.
As it stands the Aussie's run has failed at the moment with 77 cents again proving a bridge too far for the bulls. That seems to be the case both because bulls are scarred by many failed attempts to summit this level over the past year.
Equally though I think that is because much of the good news is already priced in with regard to expectations about the reflating global economy, higher stock prices, and more recently a strong signal from the RBA that it is not of a mind to drop rates.
I also sense a large degree of skepticism that the RBA's robust defence of the outlook for the Australian economy isn't quite a bit of "cheer leading". Indeed I seen economists saying just that thing.
So with the partial indicators of Q4 GDP, which is released next Wednesday - March 1, beginning tomorrow with construction work done, and then the vitally important private new capital expenditure data on Thursday traders are a little reluctant to push too hard just yet.
Mark it in your diary, Wednesday March 1 is going to be huge for AUD/USD traders.
Also important for the Aussie dollar right now is how much it's outperformed the US dollar recently.
The US dollar, in index terms, is just 1.66% weaker from its 2017 high. The AUD/USD, on the other hand, has rallied 7.42% and is sitting at 0.7681 this morning.
That suggests the next big drivers of the the Aussie are movements in the US dollar, and or the release of partial indicators, and then GDP itself.
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Those events could shake the AUD/USD from its relative slumber.
Until then it's the rough 0.76/0.7720 range for the Aussie.
Looking at the charts the AUD/USD looks to be losing momentum from the rally that took it to 77 cents, and then briefly above last week. That's a warning - not a certainty - that a retracement is in the offing. And my system went short on Friday. So we'll see how it goes in the days ahead.
Short term a break of 0.7640 would be a sign the bears are gaining the ascendancy. Until then though the bulls will be alert, but not alarmed.
In the end though the positives that might be baked into the cake right now will continue to support the Aussie dollar over the medium term and drive it higher after this consolidation is over.
Have a great day's trading.
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