The week commenced with AUD and NZD trying to sustain a rally with the recent commodity surge. The Australian dollar cemented itself to 0.7131 dollars, securing a 0.7% growth overnight. Similarly, the Kiwi dollar stood around 0.6635 dollars after hiking 0.3% overnight.
Both currencies are barely away from their nearest support levels, making a buzz around the currency trading Australia space. Seeing how AUD is nearing the 0.7050 dollars support while NZD is close to the 0.6590 support level, traders’ enthusiasm is understandable.
However, both currencies need to break through their resistance levels to keep up the rally. The Australian dollar finds its resistance level placed at 0.7168 dollars while it is placed at 0.6683 dollars for the New Zealand dollar.
Richard Franulovich, FX Strategy’s head at Westpac, talked about the recent development. According to Richard, the market is stuck to the view that AUD will remain capped at the 0.7140 dollars/ 70 level seeing the different stance the RBA is holding compared to a wide range of other central institutions.
FX Strategy aims to use any weakness towards 0.70 dollars as a chance to buy and hold for strength later in 2022. With coking coal at its all-time high and iron ore at the five-month peak, Australia’s primary commodities are holding off strong.
On the other hand, the RBA is still arguing that inflation does not pose a big threat in Australia compared to other developed countries, so the institution can stay patient on the interest rate. As markets sense risks regarding the Fed’s interest rate hikes, RBA’s stance is giving some hope to the traders.