February 16, 2022 9:52:32
The aussie is leading the gains on the week and the month as de-escalation on the Ukraine borders boosts risk appetite. Tensions are still relatively high as the visibility on the outcome of the crisis remains uncertain. This means risk premiums priced into pro-growth currencies like AUD will remain, for the time being at least.
Iron ore prices are also a key driver for the currency and recent news that China’s regulators warned against speculation in iron ore trading may put a dampener on the recent appreciation. This action could curtail any major upside in commodity prices if the Chinese authorities continue to intervene.
Tonight’s FOMC minutes from the January meeting will be checked for any details about the 2022 path for rates and the size of the potential rate hike at its next meeting in March. Aussie jobs data overnight should provide more insight on the economy’s growth progress, and we could see the RBA’s “patience” towards hiking rates begin to move.
AUD/NZD looking to breakout above 1.08
The most interesting aussie pair might be the Antipodean cross, which has been on an upward path since bottoming out around 1.03 towards the end of last year. A double bottom reversal pattern looks to have formed with the 300-point projected move from the low to the neckline potentially taking prices up to around 1.09.
The pair is currently in a bullish channel with a series of higher highs and higher lows. First resistance above is the Fib level (78.6%) of last year’s high/low move at 1.0804. This level tallies with the May and June highs from 2021 as well. Beyond here sees 1.0843 and then the March highs above 1.09 as upside targets.
Prices are getting near to overbought territory with the prospect of bearish divergence on the daily RSI if prices reverse. Solid support sits around 1.0716 ahead of the next Fib level (61.8%) at 1.0692.
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