Australian dollar reversal in the air?

Announcement posted by de2 Communications 17 Jun 2016

17 June 2016: SYDNEY -- The Aussie dollar seems to have been caught up in the whirlwind Brexit vortex as it recovered boldly after plummeting below .7300 on the sudden shift in risk sentiment.

“However, the momentum will continue to be capped by Brexit uncertainty and moderate commodity prices over the short term,” said Stephen Innes, senior trader at FX and CFD firm OANDA Australia and Asia Pacific.

According to Innes, “Even with a dovish US Fed in these uncertain times, the Aussie dollar failed to hold on to gains above .7400,”

“So without question risk gyrations around Brexit will continue to dominate trader’s commitment,” he added.

He also pointed out that the minor uptick on the Aussie dollar, on the back the latest employment data, faded very quickly.

But he also noted that risk sentiment will be the key to move the Aussie higher.

“If risk sentiment continues to swing positive, a big if mind you, the Aussie dollar may well be primed for a significant move higher. Risk sentiment will be the key,” Innes said.

In the meantime, the New Zealand dollar seems to be taking flight.

“The Kiwi is attracting far more addition and was the clear winner after yesterday’s Q1 GDP exceeding the Reserve Bank of New Zealand’s expectations,” Innes said.

He added, “The RBNZ continues to paint a rosy picture, and the Kiwi is likely only being handcuffed by risk off sentiment heading into Brexit,”

“The question is how to play the Kiwi while avoiding the Brexit fallout risk. The logical move given recent shifting opinion could be to express this view through the Aussie dollar, which continues to trade off its back foot,” Innes said.

- ENDS -