The Australian dollar broke important resistance, reached a 10 week high and is eying the float-era high. Here is an update on AUD/USD and 4 reasons for this move.
AUD/USD now trades at 1.0215, after making a convincing break above 1.0180. The 1.0180 line was the previous historic top, reached in November 2010, after QE2 was announced in the US. Since then, this line served as a very tough resistance line over and over again.
The last time that the Aussie saw these levels was at the end of 2010. It then rode on thin holiday volume and set the float-era (since 1983) high of 1.0254. This line is getting close now.
In case it falls, support is found at 1.0180, followed by 1.0080 and AUD/USD parity. For more technical levels and events, see the AUD USD Forecast.
Why is AUD/USD rising now?
- Commodity prices continue rising – Australia exports a lot of commodities, including copper which doesn’t stop rising and gold which is aiming for new all-time highs.
- China continues growing: The HSBC Manufacturing PMI for China has risen to 52.5 points, meaning faster growth. As China is Australia’s primary trade partner, accelerated growth in this economic giant helps Australia as well.
- New Zealand is OK: There were fears that Australia’s neighbor will dip into recession following the earthquakes in Christchurch. At least in Q4, this didn’t happen.
- US Dollar is weak: Oil prices continue to remain high, with WTI at $106 a barrel, and this is a heavy weight on the greenback.
This all comes as only second tier figures have been released in Australia this week. Next week will be much more busy with fresh updates on the Australian economy.
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