Aussie: Uptrend Begins
Halal Traders | Jan 22, 2017 12:56PM ET
In the last three weeks, as the new year opened, Aussie saw a first rebound off the 45 degree trendline on the weekly, which subsequently broke the downtrendline on daily with a strong bull momentum. Though the surge upward is more of a dollar weakness than Aussie strength, last Friday's report on a better than expected China GDP as well as Australian labor market, may suggest a futher upward momentum.
There is increasing evidence that Australia is facing positive momentum for growth, inflation and wages. The unemployment levels have been unchanged for 9 consecutives months and the improvement in Q4 full-time employment, have somewhat reduce the concern for RBA rate cut, though RBA's board member Ian Harper called for a lower exchange rate recently.
Aussie being a commodity currency will definitely benefit from the US fiscal expansion plan in Trump's presidency although the potential trade protectionism may affect China, who is the biggest Australia's trade partner. We would not be suprised if the exchange rate climbed to 78 US cents by the 1st half of this year.
Looking at the economic calendar, Aussie CPI will set the tone for this week before the holidays roll in starting Thursday for Aussie and Chinese New Year. The worse than previous forecast for US Q4 GDP (2.2% vs 3.5%) might as well sustain the demand for Aussie if the CPI figure fails the expectations. HalalTraders look forward to deploying our trend strategy in the weeks to come.
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