The Australian dollar has risen over 3.5% from its Aug 20 low despite a run of sluggish global economic data and price action in key commodities suggesting growth may have peaked.
For traders questioning global growth prospects into year-end, the AUD/USD is approaching opportunistic selling levels.
On Wednesday the AUD made significant gains against every major currency despite Wall Street closing mixed and a huge drop in iron ore, Australia's largest export commodity nL1N2Q30EK.
The better-than-expected second-quarter Australian GDP may have provided some support nL1N2Q304F, but it didn't capture the deleterious impact of extended lockdowns in Sydney and Melbourne that could result in negative growth in the current quarter nL1N2OQ07X.
The most likely factor behind the surprising strength in the Australian dollar is expectations of AUD-positive flows from large mining companies' dividend payments, which will only have a temporary impact.
The wild card is the Reserve Bank of Australia's Sept 7 policy meeting.
There is a wide range of expectations, with some economists saying the RBA will go ahead with its plan to modestly taper bond purchases, while most believe the bank will reverse the tapering decision made in July nL1N2PO02KnL1N2P5043.
The AUD/USD faces key resistance at the 38.2 Fibonacci retracement of the 2021 high/low at 0.7450.
Selling rallies with a stop-loss above that level may be rewarding before the next wave lower.
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