AUDUSD shows some short-term spark
AUDUSD bounced yesterday in line with the Chinese stockmarket and will be driven by it again today. Iron ore has been matching the Shanghai composite of late and that explains the link with the AUD.
Australia’s labour market data had little impact on the currency. Assuming AUDUSD comes through China’s stockmarket volatility today, attention will turn to Fed chair Janet Yellen’s speech later today on the US economic situation.
With fed funds futures pricing in a less than 20% chance of a rate hike in September, dollar bulls will want to see a bullish assessment from Yellen. They are likely to be disappointed. Hence the dollar will come under pressure and the AUDUSD rally continue.
The AUD has sold off strongly over past days (refer daily chart below) and having reached a low of .7370 on Wednesday, a (potential) developing Inverse Head and Shoulders formation is apparent on the hourly chart (refer hourly chart below), where a sustained break above Neckline resistance today (currently situated at the .7480 level) will establish an upside objective of .7590/.7610.
Entry: For today only - buying AUDUSD upon a break above .7490
Stop: .7457, initially.
Target: 50% at .7530 and 50% at .7585
AUDUSD hourly chart (click to expand)
AUDUSD daily chart (click to expand)
AUDUSD weekly chart (click to expand)
-- Edited by Adam Courtenay