Australian Dollar Tops US$0.80, Eyes Best Weekly Run Since Mid '16
- AUD/USD has crossed back above 0.8000
- It’s now looking quite comfortable at four-month highs
- A six week winning streak is in the offing. Those are rare
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The Australian Dollar has had the benefit of a powerful combination of domestic and offshore factors in its corner over the last month or so. Consumer sentiment and retail sales have picked up nicely, where once they lagged. Job creation remains extremely strong overall, despite a rather mixed bag of numbers this week.
China’s growth can never be far away from the Aussie’s fortunes given the vast trade links between Australia and Asia’s number one economy. So news that official Chinese GDP expansion topped forecasts for 2017 will have added some cheer. Romping in at 6.9%, it also exorcised to some extent the demon of 2016’s 6.7%-a 26-year low.
Add to all this some decidedly shaky sentiment towards the US Dollar and it’s no surprise that AUD/USD should be sitting very pretty.
Above you can see its five-minute candlestick chart for Friday, on which it’s looking reasonably comfortable at four-month highs above 0.8000. Its daily chart reveals a solid six weeks of gains, in an uptrend channel which still looks to be under very little serious threat. Moreover 2017’s top of 0.8124 is now coming into view for the more ambitious bulls.
There may be some scope for caution, however. Unsurprisingly the pair is rather overbought according to its Relative Strength Index. That is now up to 81 on the IG chart, very well above the 70 level which normally starts alarm bells ringing.
If the Aussie does close higher this week it will be looking at its longest weekly winning streak since the middle of 2016. However, we may also be approaching the rarified atmosphere where some pause for breath is appropriate, even if the climb resume afterwards. It may well do. AUD/USDs 20-day moving average has crossed back above both its 50- and 100-day counterparts in the last month. That’s usually held to be quite a bullish sign.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.