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Jun 22 - 01:55 PM

AUD/USD - COMMENT-AUD/USD Outlook Grows Bullish As RBA, Positioning Trouble Bears

By Christopher Romano  —  Jun 22 - 12:10 PM

AUD/USD confounded expectations that it would extend last week's fall driven by risk aversion, but RBA Governor Philip Lowe brightened the aussie's outlook by shrugging off concerns about its value after a nearly 25% from its March trough nL4N2DZ062.
Buoyant equity markets, copper futures and Australian 3-year government bond yields combined with Lowe's comment to help drive AUD/USD above the 10-day moving average, while daily RSI turned higher.
A daily close above the 10-DMA, which has capped rallies recently, would boost AUD/USD bulls' confidence, while positioning also gave them signs of hope.
Friday's weekly CFTC data nL1N2DW2CF showed a significant reduction in net-short positions.
The massive reduction occurred while AUD/USD was consolidating the March-June gains, which could indicate that investor concerns lean towards additional gains.
Options investors were also showing less fear about AUD/USD downside.
Risk-reversals in the 1-week, 1-month and 3-month time frames showed vol premiums for AUD/USD puts over calls eroding again.
A daily close above the 10-DMA and 0.6910/25 resistance should encourage bulls to drive toward the June monthly high.
A break of that high would lead to tests of the July 2019 monthly high and 61.8% Fibo of 0.8136-0.5510.

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Refinitiv IFR Research/Market Commentary


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