The australian dollar picked up buying interest in Europe and made extended gains in the morning session of NY to 0.7140 from the intraday low of 0.7070 (+70 pips). The aussie gained on the combination of short covering demand and a sizeable 0.7100 option expiry contract. The japanese yen has also weakened against the australian dollar which added impetus to the AUDUSD buying. The AUD/JPY cross rose to 88.03 from 87.23 (+80 pips). Nikkei closed +1.22% to the surprise of many, despite faltering Abenomics and Japan now technically in a recession, the equity market found good support from pension funds and offshore investors buying on dips.
The RBA interest rate easing expectations have started to fade after the RBA minutes from the Nov 3 meeting. The monetary board said that they left the rates unchanged given firmer economic prospects, the AUD is adjusting to commodity decline boosting demand for domestic production and services. Subdued inflation affords scope for further ease.
The 14 DMA has risen from 0.7080 to the 0.7125 level and encounters resistance. Expect profit-taking at these levels, taking note of the weak copper market which might take the aussie down with it. The price of copper fell to a new 6-year low of $ 4590/tonne.
Charts: WorldWideMarket Alpha Trader