AUDUSD Daily
The Australian dollar rose 50 pips today on its third day of gains. It is at its highest level since July 18, and at levels that would be the highest since January except for the June and July spikes.
What is particularly impressive is that the Australian dollar is rising despite all the bad signals coming out of China, including the recent drop in iron ore prices.
Unfortunately, I think this will also cap the upside. For over two decades, the Australian dollar has been pegged to China and I can’t see that changing. I think China will eventually turn around and treat China as a superpower. maybe The market is sensing this but I would like to see clear signs of real Chinese stimulus before chasing AUD yields. Furthermore, I am concerned about Australian property.
On the technical front, the quick bounce from 0.64 is a good sign for buyers, but it will take a real catalyst to break the July high near 0.6800, leaving little, if any, risk-reward room now.
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