Forex: AUD/NZD challenges key 61.8 fib; bullish case s/t building
FXstreet.com (Barcelona) - AUDNZD has been sprinting higher post rosier-than-expected Aus jobs reports, with the spot rate topping around the 1.2570 vicinity, to the pip with the 61.8% fib retracement intersection from 1.27/1.2350 decline.
This market has been overly bearish since losing the 1.30, with opposing RBA/RBNZ monetary policy expectations the main price-sensitive driver. However, market pricing on an RBA 25bp Nov cut has now moved down to 66% vs 78% pre-jobs report, which may push the AUDNZD further up.
No doubt the market remains short and it will be not wise to fight the downtrend, but prospects of improving technicals in AUDUSD - strong base being built at 1.0150 - may start to see the carry attractions of the Aussie back again. Moreover, the recovery in the iron ore price, up over $14 this week to now approach $120/tonne, can also potentially benefit the currency.
The latest H4 NY close candle shows an impulsive 65+pips bullish reaction off retested descending trendline, supporting a promising technical corrective formation, although the next battle overhead around 1.2570 all the way up to 1.2600 has to be won first, as to see more committed buyers entering this market.
A decisive break higher may see Kiwi bidders getting cold feet, realizing the next area of selling vallue may not be seen until 1.2670 - June 26 low - which may create as a result a fresh avalance of Aussie buying inflows to potentially develop the new upleg. On the downside, recovery of 1.2500 is needed for the downtrend to gather momentum again. Note previous bar high on lower timeframes around 1.2540/45 may see short term 'dips buyers' clustered.
It certainly looks like the pair may be hinting at a bullish case for the weeks ahead without underestimating underlying bearish bias. This view is shared by Westpac FX Analyst Imre Speizer, noting that "despite a triangular consolidation since Aug-11 was broken on 18 Sep with negative medium term implications, the decline became stretched (RSI oversold) on 2 Oct, requiring a correction to the 1.2630-1.2790 area (Fibonacci targets and 26 Jun low) which is now in progress." The Analyst adds that "MACD momentum indicators (fast and slow versions) have turned upwards, confirming the positive near term signal."
This market has been overly bearish since losing the 1.30, with opposing RBA/RBNZ monetary policy expectations the main price-sensitive driver. However, market pricing on an RBA 25bp Nov cut has now moved down to 66% vs 78% pre-jobs report, which may push the AUDNZD further up.
No doubt the market remains short and it will be not wise to fight the downtrend, but prospects of improving technicals in AUDUSD - strong base being built at 1.0150 - may start to see the carry attractions of the Aussie back again. Moreover, the recovery in the iron ore price, up over $14 this week to now approach $120/tonne, can also potentially benefit the currency.
The latest H4 NY close candle shows an impulsive 65+pips bullish reaction off retested descending trendline, supporting a promising technical corrective formation, although the next battle overhead around 1.2570 all the way up to 1.2600 has to be won first, as to see more committed buyers entering this market.
A decisive break higher may see Kiwi bidders getting cold feet, realizing the next area of selling vallue may not be seen until 1.2670 - June 26 low - which may create as a result a fresh avalance of Aussie buying inflows to potentially develop the new upleg. On the downside, recovery of 1.2500 is needed for the downtrend to gather momentum again. Note previous bar high on lower timeframes around 1.2540/45 may see short term 'dips buyers' clustered.
It certainly looks like the pair may be hinting at a bullish case for the weeks ahead without underestimating underlying bearish bias. This view is shared by Westpac FX Analyst Imre Speizer, noting that "despite a triangular consolidation since Aug-11 was broken on 18 Sep with negative medium term implications, the decline became stretched (RSI oversold) on 2 Oct, requiring a correction to the 1.2630-1.2790 area (Fibonacci targets and 26 Jun low) which is now in progress." The Analyst adds that "MACD momentum indicators (fast and slow versions) have turned upwards, confirming the positive near term signal."
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