Aussie dollar trading on a tight range

14 July 2016 -- SYDNEY - The Aussie dollar was trading on a tight range this morning on the back of mixed overall risk sentiment overnight.

“We’re seeing the Aussie meeting some resistance around the .7635-40 resistance level,” said Stephen Innes, senior currency trader at FX and CFD firm OANDA Australia and Asia Pacific.

Innes pointed out that the main factor likely weighing on Aussie sentiment is the disappointing Chinese trade data, which is dampening sentiment towards Asia FX and regional risk outlook.

“The growing economic risk in mainland China is a potential hot spot as we approach tomorrow's China Q2 GDP release. This could spring Mainland Monetary printing presses into action,”

He added, “If the People’s Bank of China reduced rates it should be a short-term positive for commodity prices and the Australian dollar should benefit.”

On the other hand, the British Pound has traded aggressively lower overnight on expectations of the Bank of England (BOE) easing.

“But so far we have not seen a significant uptick on the safe haven Australian dollar appeal,” Innes said

 In general, the market remains focused on the proposed stimulus package but the market is sitting tight awaiting confirmation of the size of the stimulus efforts.

 

Innes said, “There are enough smoke signals indicating that this could well be the mother of all stimulus efforts and could be a game changer in that regard,”

 

“I expect the Australian dollar will be a beneficiary of this unprecedented easing, especially the AUDJPY trade.

 

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