The NAB’s co-head of global currency strategy, Ray Attrill, is becoming known for his quotable references as the Aussie dollar gyrates up and down, in contrast to RBA statements.
He’s at it again today. In a note this morning he said:
They might not exactly be skipping across Martin Place to work this morning, but there should be at least a small smile on the faces of RBA Board members that the Aussie dollar is trading back on a ‘7’ handle, following a night during which the US dollar had been bid across the board.
What the RBA and Attrill both know, and what much of the hand-wringing commentary misses, is that sometimes the Aussie dollar’s destiny isn’t its own to decide. In the current environment it is the outlook for the US dollar which is the key discretionary driver of the Aussie dollar’s direction.
The RBA reckons the US dollar is going to strengthen when the Fed raises rates. That’s the big bet they are taking and even though RBA Deputy Governor Phil Lowe said yesterday that the RBA still has room to cut if necessary, it’s the US dollar that is more likely than not to drive the Aussie to 75 cents and below.
In the meantime, traders will be watching a very important level around 0.7920 to see if the current uptrend can be maintained.
Here’s the chart: