Aussie dollar slides back to .76 cents level

SYDNEY - Sept. 8, 2016 - PRLog -- The Australian dollar slides back lower this morning after hitting a high of .7730 overnight.

"We saw the Aussie sky rocketed yesterday as it got support from the Chinese trade data and the European Central Bank (ECB) decision," said Greg McKenna, chief market strategist at FX and CFD provider AxiTrader in Sydney.

"But as we've seen on numerous occasions, the sellers were lurking just above the .77 cents level and they pushed the Aussie dollar back under 0.7650 this morning."

According to McKenna, the Aussie dollar is a forex market side show at the moment. This is due to fact that the market is now focused on the ECB and the prospect of the European Quantitative Easing (QE) ending.

"All eyes were on ECB President Mario Draghi last night when he said the QE program has not been discussed. And some traders and market observers took that as a sign that the QE could be ending," McKenna said.

And this means the markets will be focusing more on the Euro and US dollar again soon.

"So it wasn't just the slight weakness in the US dollar driving the Australian dollar's move," McKenna added.

At the same time, he pointed out that "The reality is that by most metrics the Aussie dollar seems around fairly valued."

In his analysis, McKenna said the fair valuation is the main reason why traders would continually sell (the Aussie dollar) above 77 cents as they have done for a couple of months now.

"If you look at it, Australia has the strongest growth in the developed world, a AAA rating, 10-year bond rates at 2%, a big bounce in commodity prices during 2106. In addition, and a central bank that will find it hard to cut rates again with the current growth rate,"

"But despite all that the Aussie is still meeting resistance around the .77cents level."

From a technical point of view, McKenna said the Aussie chart shows last night's high was the top of what is now a wedge pattern the Aussie is trading in.

"A break would be a big story. But for now the charts, and the price action suggests unless the US dollar weakens significantly from here the Aussie will continue to be capped for the time being," McKenna said.

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