Australian Dollar Continues to Power Higher

The Australian dollar has initially pulled back just a bit during the trading session on Friday but found the 200 Day EMA as support. There is a huge bounce from there after the jobs number, and now it looks like the Aussie dollar is going to try to power higher. This is more likely than not due to the fact that people are expecting interest rate hikes coming from not only New Zealand but Australia.

AUD/USD Video 07.03.22

In general, it is going to come down to risk appetite. Risk appetite is relatively strong for commodities at the moment, and the Aussie and the Kiwi both are highly correlated to commodities. We have already seen the Royal Bank of New Zealand raise interest rates, and it does suggest that we are going to see the Aussie move in sympathy, which is quite often the case.

Having said that, if we were to turn around a break down below the 200 Day EMA, then it is possible that the market falls again. Keep in mind that the 0.73 level is crucial, so it is more or less a “binary trade” in the sense that if we stay above the 0.73 handle, then it is bullish. On the other hand, if we turn around and fall from here it is likely that we could go back towards the 0.72 handle.

Expect volatility, that is without a doubt going to continue to be a major problem, and therefore I think you need to be cautious about your position size as wild volatility will continue to be the norm as we have not only wore, but we have an inflationary concerns, while worried about slowing down growth.

For a look at all of today’s economic events, check out our economic calendar.