Australian Dollar

Posted: February 17, 2017 in Uncategorized

Well the Australian dollar beat the consensus and went high up to USD77 cents surfing the iron ore and Trump trade wave.

Technically speaking, if it breaks USD77/78 cents (likely), it could surge to USD83 cents.

But USD72 cents to USD 83 cents is a kind of its “pattern zone” and does not represents a break in the trend.

The Purchase Parity Power of the USD is circa USD 70 to USD 72 cents and the USD is a kind of mid period on its strong cycle with the start of the rising rate cycle from the FED.

So technically it should be a spike that could last 6 to 8 months since the start and then again go back to the area USD 72 cents.

What could break this pattern is actually President Trump. If the proposed tax changes do not work or implicitly make the US Debt balloon even more (in March there is the new US Debt Ceiling debate and, with the infrastructure plan, the US Debt could balloon to USD25 trillion).

But unless literally in the US things start to go badly wrong – this issue will prop the AUD to USD 83cents and the normal pattern will re establish itself.

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