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Nov 21 - 11:55 AM

AUD/USD - COMMENT-Stars Align For AUD/USD Longs Who May Target 2023'S High

By Christopher Romano  —  Nov 21 - 09:50 AM

AUD/USD struck a fresh 3-month high Tuesday with help from broad based U.S. dollar sales, but longs may have the February 2023 monthly high targeted as influences from central banks and interest rates are aligning in their favor.

Recent U.S. inflation data drove investors to shift their expectations for the Fed.
Investors now expect the hiking cycle to be complete and have pulled forward their expectations for the first rate cut.
CME's FedWatch Tool has a near 60% probability for a 25bps cut in May.

Actions from the People's Bank of China are helping to underpin AUD/USD and may fuel a long rally.
In an effort to stimulate the economy the central bank has told some banks to bring forward loans planned for early 2024 to late 2023.

The PBOC is also directly influencing the yuan, which the Australian dollar is correlated with, as recent U.S dollar weakness has allowed the bank to set much strong yuan fixings.

China's state-owned banks have buoyed the yuan by selling U.S. dollars.

Hawkish comments from RBA Governor Bullock reinforced the prospects for the Australian dollar to rally.

CFTC data indicate elevated net-short AUD positions.
Further AUD/USD gains may drive shorts to cover, which could intensify an AUD/USD rally.

Bullish technicals highlight upside risks as well.

A test of 0.7150/0.7200 cannot be ruled out.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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