- AUD/USD remains on the attack, in the main, despite a sudden set back in a spike in the dollar. AUD/USD has been advancing up to test the confluence of the 100-1hr SMA & 38.2% Fibo retracement level of the recent swing highs in the 0.7340's, recovering from a touch below the 76.4% Fibo of the same recent range around 0.7210.
- AUD/USD has been fuelled by a better risk tone in markets, (EM-FX bouncing). Currently, AUD/USD is trading at 0.7258, from a high of 0.7277 and up from a low of 0.7202.
The US pulled back from recent highs through the 97.50s, a move that started last week, to a recent low of 96.04; (Current level is 96.68, (unchanged on the day so far)). However, the Sino-US trade war angst has been supportive to the greenback that has climbed back from the lows although today's data has kept the greenback on the back foot.
US data fuelling the upside in AUD/USD
While we have seen some traction in the US housing market this week with US Housing Starts in line with expectations and today's Existing Home Sales MoM being a pleasant surprise to the upside at 1.4% vs 1.0% expected and far better than the -3.4% prior, the trend is still pointing towards moderation.
A slow down in the U.S. could be on the cards and that is creating a fresh tone for Fed expectations where the housing market is already feeling the pressure of higher rates - (The 30-year mortgage rates are close to 5.2% right now – the highest for eight years). We also got a terrible durable goods number showing that October's orders were down -4.4% vs -2.5% expected and lower than the -0.1% prior that was actually revised from 0.8%.
Meanwhile, there was a boost to risk helping the EM-FX along as well, supportive of the Aussie when the Deputy Prime Minister for Italy, Matteo Salvini, said there could be some spending revisions in order to avoid punishment by the EU with respect to their budget plans.
Week Ahead
For the rest of the day/week, there is no doubt that liquidity will lighten up into Thanksgiving celebrations in the US. For now, the Aussie can stay elevated so long as the dollar remains heavy. Eyes will stay on oil prices which have been crumbling, stocks and geopolitics. One positive newswire that is old news now really, is that Peter Navarro, the controversial White House trade policy adviser and a famous China hawk, will not be on the guest list when US President Donald Trump meets his Chinese counterpart Xi Jinping in Buenos Aires on December 1, according to a source with knowledge of the matter - That's got to be positive for Sino/US relations and risk - (Supportive of AUD/USD amid signs from both sides that they want to make progress on the dispute at the summit).
AUD/USD levels
Price action had been lacking conviction through the 23.6% Fibo of the late Jan decline to recent lows at 0.7180 where otherwise a break of the 0.72 handle opens risk all the way back to 0.7165 and 0.7120. However, the focus is currently on the bid and should the pair be able to break above the 100-hr SMA & 38.2% Fibo retracement level, eyes will be on 7th and 8th Nov double tops at 0.73 the figure ahead of R2 at the 0.7330/40 area and recent swing highs - RSI has room to go to the upside and 2hr MACD is starting to shape up bullish.
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