Can AUD/USD Clear 7400?

Can AUD/USD Clear 7400?

For the past few week we have been writing about the positive technical picture in AUD/USD as the pair made a series of higher highs. Today breakout beyond the 7300 figure validates that view as the market is coming around to the opinion that the RBA is unlikely to cut rates anytime soon. As we noted earlier, “Perhaps the greatest surprise out of Australia is the economy has been able to shift growth from mining to services and remain at a steady expansionary pace in face of declining demand from China.

One critical boost has been the consistent flow of Chinese investment capital into the real estate sector and the RBA is no doubt mindful of the fact that any further lowering of rates could fuel another bubble in housing. For that reason the monetary officials remain reluctant to ease further and that has brought yield hungry specs back into Aussie.”

Tonight’s GDP numbers which could surprise to the upside given the strong export data from yesterday, could provide the fuel to push the pair to .7400 but once there the Aussie faces much stiffer resistance and will only be able to break above if the market begins to doubt the Fed rate hike in December. If US data continues to falter while Aussie results remain steady the break of 7400 may occur before the year end.

Chart Of The Day

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