Bullishness in Aussie and the Causing Fundamentals..!!!

Aussie edges higher against the Greenback to trade at 0.7372, adding more than 200 pips in the first two weeks of Jan 2017. Interestingly, the pair has maintained bullish momentum for 5 consecutive Days. If you are still wondering whether the movement is caused by a stronger Aussie or a weaker Greenback, the answer is BOTH.

Elaborating fundamentally, the reason behind a slight reversal in the trend of U.S Dollar is Non-Farm Employment Change as well as the Unemployment Rate that was released on Friday. Investors started the New Year with a bearish bias and initiated taking profits, causing weakness in the Greenback.

Besides, Aussie the commodity currency remained supported on rising prices of a yellow metal as the Gold soared to trade at $1190 after placing a low of $1125 in the 3rd week of December. Australia being a 2nd biggest producer of Gold maintains a highly positive correlation between the Australian Dollar and Gold.

Furthermore, the economic events from China and Australia underpinned Aussie, the single currency among its peers. Just to remind, China has been a major business partner of Australia, and highly impacts the business activities. Whereas, the Chinese economic events play their role in the valuation of the Australian Dollar. Chinese consumer inflation accelerated at a moderate but steady speed, while the Producer Price Index improved sharply, leading to enhanced productivity and growth in the economy. Moreover, as per the National Bureau of Statistic, the Inflation figures (CPI) also improved to 2.1% in December, after soaring to 2.3% in November.

Besides, knowing about the Australian fundamentals, according to the Australian Bureau of Statistics (ABS), the seasonally adjusted retail turnover advanced 0.2% in the month of November 2016. This follows a rise of 0.5 per cent in October 2016. More precisely, in seasonally adjusted terms, there was growth in food retailing (0.4%), apparel, footwear and individual accessory retailing (1.7%) including household goods retailing (0.2%). There were lapses in restaurants, takeaway and cafe services (-0.8%), and last department stores (-0.3%).

Lastly, in the week ahead, investors are likely to focus on Fed Chair Yellen Speaks, Retail Sales, and PPI figures to predict the next movement in the pair. Whereas Australia is not likely to release any economic event, but investors will consider the yellow metal to determine further trends in Aussie.
For more detailed analysis from the author, please visit NoaFX.

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