Australian dollar technical signals still bullish

Via Credit Suisse:

AUDUSD has stabilized above the 13-day exponential average and key lows at .7666/43AUDUSDhas stabilizing above the 13-day exponential average and key lows at .7711 and .7666/61as expected, which ideally continues to hold to see the market shift into a high-level range, before the uptrend eventually resumes, in line with the large “head and shoulders” base that is still in place.It’s worth stressing though that the risk of a deeper pullback remains high,in particular as a break below .7643 would now complete an intraday top (see below), and we, therefore, stay on a cautious footing. Nevertheless,we see resistance initially at .7799, above which should be sufficient to remove the topping risks and open the door to another test of the pivotal April 2018 high at .7816, where we would expect to see initial sellers at first to maintain anew range. Beneath .7643 would instead confirm intraday “head and shoulders” top to suggest a deeper corrective setback and a fallback to.7603/.7599, where another initial hold is expected. Further near-term sideways trading is expected at this stage below the key .7816 resistance.

The Deutsche view is similar:

A more concerted pushback from Fed officials on early tapering overnight, attempting to sound more dovish. It’s took the sting out of the fixed income move for now and the USD back under pressure. Several key levels have held withAUDUSD holding its uptrend off early November lows around 0.7670 and NZD the ytd lows at 0.7150. I expect more of a holding pattern from here unless Powell or Biden give the market a reason for direction but the market will be building conviction to sell USD rallies if fixed income consolidates. The narrative can turn back on the fed but only once the market sees evidence in the data and the vaccine rollout that an early lift-off might be considered. The underlying theme of strongAntipodean data lives on (Aus retail sales the latest) and grind case higher for AUD and NZD still stands on reflationary theme, relative virus success and the underlying data. As for Canada, a similar trade though with some pushback on the currency by the BoC. We have chipped away at the CFTC short out there which is now small long, but still we feel CAD is lagging the move in other risky assets due to oil but oil has since recovered (WTI back above 50c) – hit the sell zone earlier this week around 1.28

David Llewellyn-Smith
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Comments

  1. *yawn* Who’s printing money today?

    Money Printings starting to run out of juice in most places.
    https://gyazo.com/d2e7f5106e4d0bfcb0c459fa56bff501

    I remember the days when money would be printed and it’d last for a week or two. It was a really big deal. Now huge amounts are being printed, markets barely move and its all pissed away in a couple of days. Money Printing certainly doesnt seem to have the effect it used to.

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