Comment: Making its way up towards our medium term target which remains at 0.8800/0.8900, while trailing the Kiwi since May; a break above 0.9000 on a first attempt is unlikely. The ultra-long term perspective suggests that last year’s collapse below 0.8000, followed by a 25 cent rally this year, was all some sort of massive ‘extension’ cause by a manic rush through a tiny fire exit. Though overbought bullish momentum is running at some of the higher levels of the previous five years so we favour an eventual squeeze to 0.9400 and possibly a move to parity if generalised US dollar weakness really takes hold over the year-end.
A weekly close below 0.8400 would force us to adjust.
