By Nicholas Cork
The range trade continues as a very solid rejection of the 0.7050 low took place yesterday followed by a test of 0.7130 overnight. Sentiment again on the up as White House advisor Kudlow hit the wires touting progress in trade talks but still with the caveat that a final deal remains elusive. Talks are to continue in Washington…
No matter the accuracy, the local data headlines have been very impressive locally and investors/punters would likely not initiate new short Aussie positions so close to the recent AUD lows unless the economic data was also showing weak headline numbers – but that is not the case as Building Approvals and Retail Sales for Feb posted results higher than any forecaster predicted.
Supporting the AUD on dips currently are the revisions from Vale Brazil about their lost iron ore output, which they said last week was 75 mio tonnes which at a nominal figure of USD $50 per tonne equates to 5.5 bio AUD worth of potential extra exporter demand. However, it is difficult to get too excited as we are still drifting around the 70/72 range but will continue to monitor AUDJPY as the true historical risk-sentiment monitor and 80.00 seems to be the important level that is capping it for now.
With Brexit, the Bank of England weighed in overnight with the Governor saying the risk of a no-deal is ‘alarmingly high’, and he also said that claims being made about how to manage this situation is ‘absolute nonsense.’
AUDJPY – resistance at 80.00 but blue sky above (Reuters)
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