The Australian Dollar is the strongest of the major currencies this week, rising at the least 1.39% against the New Zealand Dollar and a large 8.25% gain against the Japanese Yen. The AUD rose against all other G-10 nations as risk aversion decreases and commodities show stability with metals actually rising this week. Copper showed a large jump, rising 11 percent this week, the largest advance since the start of the year. Commodities are moving higher as optimism builds that stimulus plans in China, the US, and other nations will spark a rise in demand that had been falling sharply since the latter half of 2008.
Risk appetite has increased, with global equity markets rising and the Yen declining against all other G-10 nations this week. Indicators in Australia came in mixed with Retail Sales showing a large rise, while house prices continue to fall at a faster pace. Trade balance surplus declined significantly below expectations and the Reserve Bank of Australia cut the key lending rate by 100 basis points to 3.25% as analysts had expected. Important releases next week include confidence figures and employment and lending data.
On the technical front, the AUD/USD saw a large rise today and closed near the top of a greater than 200pip move. The long green candlestick and sharp upside at the end of the day signal strength that may continue next week. The pair closed above .6737 signaling further upside may be ahead. The pair has traded sideways for the past four months and no clear long-term direction can be stated.
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