The overnight strengthening of the USD seems a little overdone and as a result, today provides a good opportunity for AUD longs to add to their positions.
· The global economy remains strong, with the IMF predicting global growth of 4.8%, keeping industrial production strong, keeping commodity prices strong and should keep resource driven currencies well bid.
· The US economy is weak, housing, low growth….recession?
· Carry trade should continue to drive high yielding currencies upwards and with the market now pricing in a 25bps rate cut at the next FOMC meeting, this should further the appeal of borrowing USD to buy AUD.
We may not be going to parity in the near term, but I’m expecting the 0.9000 level to act as a focus for the market and I expect it to get back up there with a week.