The aussie is getting an added boost on the day as China announces a cut to its reserve requirement ratio earlier
Markets are taking the news from China in stride for the most part but the development is no doubt a boost for risk assets, or at least it doesn’t take away from the optimism we have seen building over the past few sessions.
The aussie has gained as a result and we’re also seeing fresh weakness in the swissie with USD/CHF moving above 0.9900.
For AUD/USD, price is now trading at fresh one-month highs above the swing region of 0.6818-22 and now even moving past daily resistance from the June low @ 0.6832.
We may be on the cusp of a potential breakout here towards 0.7000 possibly if the yields spread between US and Australian bonds are anything to go by.
Looking at the daily chart:
There is some minor resistance around 0.6865 next but the key level buyers will be aiming for is the 100-day MA (red line) @ 0.6914. Break above that and sellers will lose the bearish bias in the pair that was established since early August.
Looking ahead today, there are still a couple of key risk events for traders to navigate through; being the US jobs report and Fed chair Powell’s speech.
Let’s see how that will affect AUD/USD towards the end of the week and if those events will set up a platform for a move higher next week.