Aussie tests 70 US cents on anticipation of trade agreement
|AUD - Australian Dollar
The Australian Dollar continued its run higher following news overnight that a trade agreement is imminent between the United States and China. Opening Wednesday morning at 0.6957 against the US dollar, currency markets were buzzing in anticipation of further news in a US-China trade deal. Risk appetite lifted following comments from US Treasury Steve Mnuchin that a trade agreement between China and the United States is 90% of the way there.
The Aussie tested 70 US cents reaching an overnight high of 0.6995 during the European session. With little news domestically heading into the weekend, any hopes of breaching resistance at 70 US cents will be dependent on this evenings final United States Q1 GDP number due for release.
From a technical perspective, the AUD/USD pair is currently trading at 0.6986. We continue to expect support to hold on moves approaching 0.6940 while now any upward push will likely meet resistance at the 70 US cent handle.
Key Movers
Markets slashed bets on the Federal Reserve making multiple rate cuts this year driving the US Dollar higher against the Japanese Yen overnight. President Donald Trump’s position of unnecessary high interest rates at present were starkly juxtaposed with the Federal Reserve as the President has commented on many occasions that rates should be much lower. Market participants scaled back expectations of multiple cuts overnight though as St Louis Fed President James Bullard who is widely considered a dovish banker commented that a half-percentage point drop in July’s meeting would be overdone.
The USD/JPY reached 107.85 overnight as core durable goods orders for the month of May were positive following a poor reading in last month. The news supported initial movements higher for the US Dollar index which finished square for the day at 96.15.
The G20 summit in Osaka, Japan will be a major focus heading into the weekend as the major leaders from around the globe expect trade agreements and tensions in the middle east to be a focal point of discussion.
Expected Ranges
AUD/USD: 0.6950 - 0.7020 ▲
GBP/AUD: 1.8000 - 1.8400 ▼
AUD/NZD: 1.0400 - 1.0500 ▼
AUD/EUR: 0.6100 - 0.6200 ▲
AUD/CAD: 0.9100 - 0.9200 ▼
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