Pair is posting gains in the fifth day in a row. Aussie greatly benefited from the optimism among investors that the US and China may seal a deal in the following meeting at the end of the week. Moreover, RBA Governor Lowe implied that the Australian economy could benefit from infrastructure spending enabled by lower rates for government borrowing. As globally policymakers took an accommodative stance, he commented that because of that the effect on exchange rates would be offset. Pair aims for 0.7000 when we could expect a pullback as it will enter the overbought area.
Comment:
As closely tied to emerging markets, trade optimism supported Aussie to a three-week high hovering around 0.7000 level as predicted. If tentative truce between the US and China change to the permanent one it could further underpin the pair to reach 50% Fibonacci at 0.7050 level. Stronger Dollar could afterwards take advantage and pull back the pair.