The Australian dollar continues to be active, as we initially shot higher, but as the CPI numbers in America came out hotter than expected, the pair reversed.
AUD/USD
The Aussie dollar initially tried to rally during the trading session here on Wednesday and broke above the 200-day EMA, but CPI numbers came out much hotter than expected. With that being the case, we're seeing the U.S. dollar strengthen against most things, not only against the Australian dollar, but for the most part across the board. Higher rates are freaking the markets out.
Longer term, does this matter? Maybe not.
We'll have to wait and see. The Australian central bank is relatively hawkish as well, and it's worth noting that China, at least, is starting to expand according to its PMI numbers, and that has a major influence on Australia as well.
Longer term, we've been between the 0.6850 level and the 0.7250 level for some time. Short-term pullbacks, I think, probably open up the possibility of buying, but we need to see some type of relief in the rate markets. If rates continue to scream higher and we break down below the 0.6850 level, then it's likely that the Australian dollar falls apart.
I do think that this range that's been in effect for the last year probably holds, so the downside, although it might be coming, is somewhat limited here. I don't really have an interest in trying to get too cute and get aggressively negative.
If we were to turn around and break above the highs of the Wednesday session, that would be a bullish sign, and we may go chasing the 0.72 region. Expect a lot of choppy volatility, but right now, it's all about rates in the US, which is a massive driver of all things financially.
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