It’s a holiday in the USA, so there’s not much news to prompt the international market this morning. This might be an opportune time to take another look at what is hurting us the most at present, other than the weather.
The Aussie dollar continues to firm, topping out at 79.79 in overnight trade. Currently it is going through at 79.69 so it hasn’t exactly fallen out of bed after setting the sessions high. The strength in the AUD can be partly explained away by the weakness in the USD but looking more closely we also see the AUD strengthening against many of our major trade partners, including India.
With the US dollar at a three year low commodities, like gold, have increased in value. Policies in place in the USA were not expected to see the USD drop as low as it is. Economic activity in the US is picking up and recent policy changes have been viewed as more of a stimulus for the USD than a threat.
The US Fed have indicated rates will rise in 2018 but with other economies, including China also experiencing increased growth does that foreshadow a rate rise in the US. Will the US fail to draw the US dollars back into the USA because as the US economy improves so do many other global economies. It appears the real winner may become the safe haven that is gold. This is the threat to the Aussie producer of exports. With the improving gold price we are most likely to see a stronger AUD. Are we about to see the AUD actually firm further. Ask you local gold trader what their position is, if they think getting long gold is the right way to jump at present than potentially you should start to factor further upside into the AUD.