NEWS / Foreign Exchange

AUD Overlay

The Australian dollar has had a bit of a pullback during offshore trading from yesterday??™s highs, but the price action continues to look very encouraging of our overall bullish view. The Us economy remains troubled but position squaring ahead of the FOMC meeting, and indeed the BoE and ECB as well, has seen a bit of a USD bounce. Whether this continues to week end is uncertain, but what is clear is that the AUD is in a very strong position to capitalize on any resumption of USD weakness.

Support at .8225 is again favoured to hold if tested, and tend to think more immediate support .8240 will hold for sideways consolidation, before resuming the uptrend. The trigger for up-trend resumption is a recovery of resistance at .8315.

The AUD may experience a little more downside testing at first today pre FOMC, but the dominant risk remains very much to the upside.