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29 Jan 2014
AUD/USD breaks into new weekly highs
FXstreet.com (Bali) - AUD/USD is being favoured by 'risk on' appetite in the Asian session, following a whopping 4.25% rate hike by the Turkish central bank, in an attempt to limit capital outflows off the country.
Risk on near term?
While the Turkish central bank action may not have long lasting effects for risk, despite the symbolic message of more bold moves possibly to come by other central bankers in emerging market should the crisis deteriorate, it looks like near term traders are happy buying risk trades.
As Kathy Lien, Co-Founder at BK Asset Management, notes: "Looking ahead, we expect a further improvement in risk appetite in the Asian and European trading sessions. While this does not resolve Turkey's underlying problems that include a massive current account deficit and political troubles, it should be enough to temporarily restore confidence for investors."
AUD/USD technicals
Technically, according to Jim Langlands, Founder at FXCharts: "Above 0.8820 would see a run towards 0.8870 and then possibly to the descending trend resistance, currently at 0.8920. There will be plenty of selling interest ahead of that, although the 4 hour charts do look mildly positive still."
While gains can certainly be built ahead of the FOMC monetary policy decision on Wednesday, caution is required as most of the smart money is likely to be sidelined before the risk headlines, thus any silly moves north may find plenty of sellers trying to fake any silly moves to the upside.
Risk on near term?
While the Turkish central bank action may not have long lasting effects for risk, despite the symbolic message of more bold moves possibly to come by other central bankers in emerging market should the crisis deteriorate, it looks like near term traders are happy buying risk trades.
As Kathy Lien, Co-Founder at BK Asset Management, notes: "Looking ahead, we expect a further improvement in risk appetite in the Asian and European trading sessions. While this does not resolve Turkey's underlying problems that include a massive current account deficit and political troubles, it should be enough to temporarily restore confidence for investors."
AUD/USD technicals
Technically, according to Jim Langlands, Founder at FXCharts: "Above 0.8820 would see a run towards 0.8870 and then possibly to the descending trend resistance, currently at 0.8920. There will be plenty of selling interest ahead of that, although the 4 hour charts do look mildly positive still."
While gains can certainly be built ahead of the FOMC monetary policy decision on Wednesday, caution is required as most of the smart money is likely to be sidelined before the risk headlines, thus any silly moves north may find plenty of sellers trying to fake any silly moves to the upside.