We wrote that all the conditions for an ascent of the Aussie were in place. The excellent Australian jobs report, coupled with upbeat Chinese GDP and a synchronized global growth cycle sent AUD/USD to struggle with 0.80. Yet another bout of dollar weakness was needed to push the Aussie to a comfortable position above 0.80.
And now, the A$ continues higher and Aussie/USD breaks another resistance level, 0.8065. This was the high in July 2017. The pair is now trading at 0.8074. This is a slow move and there is enough room until the next level of resistance: 0.8125, the peak that was seen in September. The next cap is 0.8165, which already dates back to May 2015.
The most recent rise is pushed by US Treasury Secretary Steven Mnuchin. He said that a weaker dollar is good for the US, a clear departure from American policy in the past.
The 0.80 level now turns into a line of support, even if its role is more psychological than technical. The next cushion is at 0.7940.
This is a very light week in terms of economic indicators from Australia. We received the MI Leading Index overnight, which came out at 0.3%, better than 0.1% last time, yet this is a third-tier indicator.
The next move depends on the US dollar. A speech by Trump in Davos and existing home sales are on the agenda. The most important release is on Friday: the first read of US GDP for Q4 2017.
Will the pair go higher? Here is how the recent rise looks on the daily chart.