AUD/USD touches 0.7500; Hail Mary pass targeting 0.7580?
|Currently, AUD/USD is trading at 0.7504, up +0.81% on the day, having posted a daily high at 0.7517 and low at 0.7428 as market participants keep buying a risk-on tone.
Sean Callow, Analyst at Westpac, this morning commented on the Australian dollar outlook, "We expect USD to soften a little further near term as such unease continues to grow. AUD/USD looks to be a key beneficiary of this move, set to probe above 0.75 near term. Yet with every indication that Trump is serious about taking strong protectionist action against China, AUD will remain at risk of becoming collateral damage of a US-China trade war over the course of 2017. It is difficult to see AUD/USD spending much time above 0.75, especially with USD downside ultimately limited by Fed tightening expectations in the months ahead."
"Perhaps investors were naïve to expect clarity at the press conference. We are keen to hear from Treasury secretary nominee Steven Mnuchin at his nomination hearing, likely late this month. In the meantime, the steep rise in US yields that underpinned the US dollar after the election is faltering," Callow concluded adding his perspective to yesterday's speech fiasco.
Three hikes seem appropriate this year – FOCM’s Harker
In the data space, dollar bulls received slightly positive news to hang on from the Initial Jobless Claims readings, where 247K a better than expected result, had a soft impact as the result is priced at the current dollar value. Later, on the economic docket, Chairwoman J.Yellen may decide to entertain traders and investors with another blurry statement.
AUD/USD Technical Levels
There are two scenarios to consider in 2017 when trading the Aussie: probability to experience at least 3 rate hikes by the FED and China precarious demand. The issue to weigh is which one matter the most to the market; best bets? The horizontal relative value, at least for the last nine months, oscillates around the 0.7580 resistance and has a decent support at 0.7420. Further, Aussie gains have been capped several times above the 0.7700 handle. Furthermore, prices need on the spot a close and open above 0.7520 to justify a bullish continuation in a move similar to kill or fill. On the flip side, Stochastic (5,3,3) is comfortable in the overbought territory and that's a sign to expect a slowdown from buyers.
On the long-term view, there is technical evidence to expect short-sellers to attach the pair at 0.7519 (long-term 23.6% Fib) and 0.7535 (short-term 61.8% Fib) a narrow, but thick zone that promises to battle Aussie bulls. To the downside, on the table 0.7460 (short-term 50.0% Fib) and 0.7385 (short-term 38.2% Fib) are close targets for those expecting a dollar counter-attack.
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