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The AUD/USD pair had a strong showing for most of the session on Friday, but turned around and formed a shooting star. In fact, this was a very wicked shooting star that would have a lot of buyers concerned. More the likelihood oh, it was simply a closing out of positions at the end of the week so the traders wouldn't have to carry too much risk into the weekend. After all, there are over 20 US embassies around the Middle East being attacked right now and as a result there is a high possibility of some type of headline risk rattling the markets over the weekend.
The shooting star suggests we're going lower, but it must be said that the area all the way to the 1.04 level should be rather supportive. Looking at this pair, breaking above the top of the shooting star would be an excellent signal to start buying again. So would the polling back of price, only to find support at a nice handle such as the 1.05 level.
We are still bullish of the Australian dollar, as the Federal Reserve will continue to pump liquidity into the marketplace. Nobody eases like the Federal Reserve, and the Australians will find themselves hard pressed to keep the value of the Aussie dollar down.
Because of all of this, we think that anytime this pair falls it will simply be a buying opportunity. With traders out there looking for yield in any place they can get it, the fact that this is a positive swapped pair will invite a certain amount of traders into the market.
It is true, there is talk of potential Australian easing going forward, but the Reserve Bank of Australia is no match for the Federal Reserve when it comes to monetary easing. The Federal Reserve will simply out print the Australians, and as such the Aussies may choose not to ease, as it will do hardly any good. If there is central bank easing around the world however, you could also make an argument for people buying Australian minerals, and this of course will be a positive for the Australian economy. Because of this, we are very bullish of the Aussie the dollar.