All three commodity currencies are gaining good ground against the greenback. The weakness of the dollar is mostly due to a perception that the Fed will allow the economy to steam up (as the excellent NFP has shown) and will not raise rates anytime soon.
Commodity currencies are taking advantage of this sell-off, which each and every one of them defying its own gravitational forces.
Can this continue? Not necessarily, but here is an update on the situation right now, with recent developments as well as support and resistance lines.
AUD/USD reaching for high resistance
The Australian dollar does not seem to be worried about the recent Chinese trade data. Australia’s No. 1 trade partner has reported a drop in exports and imports, but the Aussie still rallies on. Perhaps the expected pause in the RBA’s rate cutting cycle helps as well.
AUD/USD is trading around 0.7740, a line that capped the pair earlier this year. Further resistance awaits at 0.7765 and the 2016 high of 0.7840 is the top line. Support awaits at 0.7660 and 0.76.
NZD/USD is not afraid of a rate cut
The kiwi is up 1.2% and trades at the resistance line of 0.7250. The next line to watch is 0.7330. Support awaits at 0.7160 and 0.705.
It seems that the New Zealand dollar is already pricing in a rate cut in the upcoming rate decision (the morning of August 11th in New Zealand). The RBNZ laid its heavy hints and unless Wheeler and his team provide extreme dovishness, the pair could even extend its gains despite a cut.
More: RBNZ previews: a cut is expected, but how much?
CAD rises with oil, despite jobs
The Canadian dollar is not breaking into new ground, but actually recovering quite nicely. Friday’s poor Canadian jobs report, which showed the country shedding 31.2K jobs, hit the loonie, but the winds have changed.
Oil prices continue holding higher ground at the $42 handle, maintaining the bounce from below $40. The C$ also benefits from the optimism in the US: a stronger US economy is good for Canada: more demand.
USD/CAD currently trades just above 1.30. Further support awaits at 1.2910 and 1.2830. Resistance is at 1.3080 and 1.3140.
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