Australian Dollar Talking Points
AUD/USD[1] initiates a fresh series of higher highs & lows as it breaks out of a narrow range, and the pair appears to on the cusp of a larger recovery as market sentiment improves.
AUD/USD Stages Larger Rebound While Retail Shorts Jump 38%
The recent advance in global benchmark equity indices[2] instills a constructive outlook for AUD/USD as it points to a pickup in risk-taking behavior, and the shift in market sentiment may influence the exchange rate over the coming days as the economic docket remains fairly light until the Reserve Bank of Australia (RBA) releases the monetary policy meeting minutes on July 17.
Keep in mind, recent comments from the RBA suggest the central bank is in no rush to implement higher borrowing-costs as ‘the low level of interest rates is continuing to support the Australian economy,’ and more of the same from Governor Philip Lowe & Co. may produce headwinds for the Australian dollar[3] as officials tame expectations for an imminent rate-hike.
At the same time, the IG Client Sentiment Report[4] highlights an interesting dynamic as the number of traders net-long AUD/USD is 5.9% lower than yesterday and 20.5% lower from last week, while the number of traders net-short is 6.8% higher than yesterday and 38.3% higher from last week. The sharp swing in retail positioning suggests the crowd was attempting to trade the recent range in AUD/USD, with the break of the monthly opening range raising the risk for a larger rebound in the exchange rate as it carves a fresh series of higher highs & lows.
AUD/USD Daily Chart
