AUD/USD consolidates strong gains, heads for the highest close in a month

The AUD/USD pair finally broke decisively above 0.6800 on the back of a slide of the US Dollar across the board. It peaked at the beginning of the American session at 0.6832, the highest level since September 18. Over the last hours, it has been consolidating significant daily gains, moving between 0.6830 and 0.6815. 

The Brexit deal boosted equity markets earlier today and also the AUD/USD. Over the last hours, the optimism faded and Wall Street pulled back but the pair remained around daily highs, holding firm to the 70-pip daily gain, the best performance in months. 

Data from the US did not help the Greenback on Thursday. Industrial production dropped 0.4%, more than the expected 0.2% decline, housing starts tumbled 9.4% in September, pulling back from the highest level in 12 years; and initial jobless claims rose to 214K in line with expectations. 

Brexit developments were the key driver on Thursday following the deal between the UK and the European Union.  Growing concerns about the outcome at the UK Parliament limited optimism. 

Headlines from the Brexit drama could continue to weigh on market sentiment. On Friday, Reserve Bank of Australia Governor Lowe will deliver a speech and critical Chinese economic data is due (retail sales, industrial output and growth). 

Bullish outlook reinforced 

The close above 0.6800 in the AUD/USD signs more gains ahead and a potential test of the next barrier at 0.6850, above then comes September highs at 0.6890/95. On the flip side, 0.6800 has become a relevant support level followed then by 0.6760 (20-day moving average).