AUD/USD's Huge Daily Reversal to Fresh 2016 Highs
AUD/USD
has followed suit of the recovery in oil and has closed and exceeded
the bearish opening gap. Moreover, the price has rallied to fresh highs
for 2016, scoring 07760 and up +0.40% on the session and from lows of
0.7631.
AUD/USD has followed the price of oil and performances in
China and subsequent effects on the price of oil as China accounts for a
large share of the global demand for oil and what goes down in China
impacts the Aussie as being Australia's largest trade partner.
However, the scenario of the upside, as suggested overnight in AUD/USD: stabilising after heavy supply,
has played out. AUD/USD has rallied to the vicinity of the previous
target of overnights R2 at 0.7768, making fresh highs for the year of
0.7761.
The catalyst for the move came in European trade as AUD/JPY
buyers emerged and as Europe got going, the price of oil managed a
strong recovery as the heat from the Doha story cooled down as markets
got more realistic on the outlook for the price of oil. One opinion the
market might be starting to take is that a production freeze where
most countries are producing at near-record levels, is unlikely to be a
major cap on supplies anyway.
Doha aftermath, oil ministers piping up still
Since
the weekend's Doha talks and the Saudis u-turn, the Iranian oil
minister argued that they are not responsible for the oil glut and have
asked OPEC and non-OPEC oil producers to continue talks to bring market
stability. Meanwhile, despite Russian energy minister Novak's recent
comments about stability coming from supply and demand rather than as a
subsequent outcome on such agreements as output freezes, Russia was
reported to hold talks with Saudi Arabia on output freeze if OPEC
decides to proceed internally.
AUD/USD levels
AUD/USD
holds a bullish bias still above the 20 dma at 0.7614 targeting 0.7801
R3. RSI (14) remains below overbought readings across the time scales at
62 on the daily candles. The pivot is located at 0.7713. Should a
breakout to the downside occur, S3 is located at 0.7636 with today's low
at 0.7630 with the aforementioned 20 dma as a key support.
