By Nicholas Cork
Risk appetite remained elevated overnight as can only assume the Mueller report has calmed market fears, as Trump now gets back firmly on the front foot and prepares for his next rally in Michigan on Friday our time. Some talk also of a win in the border wall funding will only further embolden his stance. Despite weaker US data, the USD gained against the major currencies and a strong rise in the commodity currencies has meant a very good night for AUD cross rates. AUDJPY is up 150 points since Monday’s lows. It is worth continuing to keep an eye on AUDJPY for sentiment direction. This cross has not been above the psychological 80.00 level this year and any further uptick in risk sentiment should see a test of it.
The AUDEUR also made significant gains towards year-highs near 0.6350 (tested 6 times this year already) thus a break above would lead to some stop-loss buying I would assume. The one to watch may be AUDNZD today as the RBNZ steps up for their Interest Rate announcement and with all expecting no change, the statement will be the catalyst for any moves as this Central Bank has been a little wishy-washy on whether the next rate move is up or down. A firm bias towards a rate hike will likely see AUDNZD plunge towards 1.01/1.02 however if not, 1.05 beckons. But worth remembering this cross is within a few cents of all-time lows thus those needing to repatriate NZD may want to look at this cross a bit more closely.
In other news, China bans a second Canadian exporter of canola seeds as they lift the stakes, US officials have said that the Russian military contingent that arrived in Venezuela contained special forces and cybersecurity personnel, UK labour leader Corbyn says the house must now come together to find a way forward, and ex-Trump aide Papadopolous (briefly) has applied for a pardon from Trump himself.
AUD still within 0.7000 – 0.7200, major resistance at the 200-day moving average line at 0.7210 will be tested on a further sentiment pick-up.
AUDNZD chart (Reuters)
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