Commodity Currency Break Out After Chinese Move
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Commodity Currency Break Out After Chinese Move

The Chinese announcement rocks the markets at the beginning of the week. Commodity currencies are enjoying risk appetite, while European currencies are only experiencing small gains against the dollar. Updates about the breakouts in the loonie, Aussie and kiwi.

While there are still doubts about the depth of the Chinese move, the yuan already began appreciating against the dollar, fueling hopes of global recovery. Speaking of fuel, the price of oil jumped above $78, the highest levels since May 6th. The Canadian dollar likes it:

USD/CAD broke below the 1.02 support line and is getting closer to parity. The break continues a move from last week, and at 1.0160, parity is getting close once again. Canada enjoys a strong economy, and with risk appetite and the rising price of oil (Canada’s main export), the C$ has more room to rise.

Below parity, the next lines of support are 0.98 and o.97, but it’s important to state that parity is a very tough area which the pair struggled with beforehand.

AUD/USD also made a significant breakout – the pair jumped over 0.8735 (December’s low) and passed the 0.88 line. At 0.8840, the Aussie next target is the round number of 0.90 that worked as support line in the past.

Above, the next line is 0.9135 and below 0.8735 the next big support line is 0.8567. Currently there’s a gap in the chart, that probably won’t be filled soon.

Australia’s main trading partner is China. With a stronger Chinese yuan, China can now buy even more Australian iron, gold and other commodities.

NZD/USD is also on the move. After settling above the important 0.70 line last week, the pair was capped by the 0.7080 resistance line. This was broken at the wake of the new week.

With a gap in the chart, NZD/USD now trades at 0.7134 and aims for the next level – 0.72. A break above this line will open the road for 0.7320. A drop below o.70 will send the pair towards 0.6910.

The kiwi also enjoys trade with China, with many types of commodities. Similar to the Aussie, it also enjoys a high interest rate and a status of a “risky” currency that is bought when there’s optimism.

Note that also the Euro and the Pound saw gains, but the gaps in the charts were filled quite quickly. The Euro-zone and the UK both suffer from severe debt issues, that are limiting any rise in their currencies.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.