May 7, 2021 14:47:02
Let’s revisit the aussie which is top of the major currency pile this week/month. The commodity rally continues to make headway with the Bloomberg Commodity spot index reaching levels not seen since 2011. Metals of every colour are rallying while frenzied buying is being seen in iron ore as rising inflation concerns and rebounding global growth spur the bulls. Such strong buying activity is something to watch as there is a risk of a sharp correction if this continues at the same pace.
Is it only a matter of time before AUD catches up with the kiwi and loonie? Central bank divergence is a theme here as the RBA this week confirmed once more it is in no hurry to withdraw stimulus, in contrast to the previous week’s Bank of Canada meeting which turned more hawkish. However versus the greenback, the Fed is going nowhere in moving its policy dial after today’s shocking NFP report.
Technically, AUD/USD remains bid above trendline support at 0.7665. The 50-day SMA is also doing a job of supporting the pair around 0.77 while below this week’s low at 0.7675 is a good place for stops for the more cautious. The mid-March high at 0.7849 needs to be cleared to definitely confirm the upside move, but momentum indicators are picking up which should mean the aussie can then test the end of February high at 0.8007. Beyond here, bulls will target the 2018 highs at 0.8135.
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