It seems Westpac chief economist Bill Evans has a strong following in the trading universe with his dual call of a rally in the Aussie dollar and a 15% surge in iron ore finding traction.
The Aussie rallied from a low of 0.8649 yesterday to hit a high of 0.8787 after buyers moved in and the Chinese trade data suggested an economy much stronger than many thought.
It’s at 0.8763 this morning, which is a big move in the context of recent weakness and everything else that happened in Forex over the past 24 hours.
But the Aussie was the beneficiary of a trio of positive reinforcements in the past 24 hours.
Not only was the Chinese data better than expected but December iron ore rallied another $3.25 to $83.25 a tonne in futures in the past 24 hours.
Likewise came the news from the CFTC via the ANZ economic team which showed that for the first time in months, all the bulls have been washed out of their Aussie dollar positions and traders on Aussie dollar futures markets are now short.
Indeed, from a behavioural standpoint, one of the prerequisites of an Aussie rally is that the bullishness washes out of the market.
Maybe Bill Evans is right – so far he has the Aussie and iron ore on a string.
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