Currently, AUD/USD is trading at 0.7805, down -0.33% on the day, having posted a daily high at 0.7840 and low at 0.7802.
AUD/USD made a 1.3 month high before moving into this phase of consolidation. The upside is not totally associated with a better outlook for Australia. However, the stronger consumer inflation was a foundation for a higher Aussie, but the dollar is driving the price higher on the back of Yellen's dovish testimony and weak US data at the end of last week that cemented her concerns for traders.
The Chinese data overnight underpins Aussie strength considering how much China invested last year down under. China's investment surged by 11.5% in 2016 to $11.5b amid booming demand for agricultural assets and infrastructure projects, and a record number of deals were signed with Chinese companies.
AUD/USD: too high for comfort's sake?
However, the Aussie is on the path towards the usual jawboning from the RBA, something that traders will be keeping a close eye considering there are 3 Australian policy makers scheduled to speak this week. We also have the key Aussie jobs data that traders will be concerned for. Analysts at Nomura explained that the Australian economic data surprise index is currently at fairly elevated levels and historically this has not tended to last. "On this front, we would note that monthly employment growth in Australia has exceeded market expectations in six of the past seven months. Even though the forward-looking indicators point to further job gains over coming months, this type of positive run in the volatile Australian labour market series, particularly to the extent recently observed, seldom lasts without a pause," argued the analysts at Nomura.
Analysts at Commerzbank noted that AUD/USD has eroded the top of its converging range and surged higher. "This break higher has seen a weekly close above the 0.7708 resistance line and this targets the 0.7836/50 the 2016 high and Fibo. This is tough resistance and may well hold the initial test, however, the risk is now increased for a break above here to the 0.8018 200 week ma and then the 0.8162/66 May 2015 peak and 50 % retracement." To the downside, 0.7740, 13 July congestion and 0.7710, 29th June highs are key targets.
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