JPY the laggard among the major bloc
The AUD is sure one stubborn currency. Just 24 hours ago you wouldn't have imagined the commodity currency to be where it is now. But here we are.
The aussie strength today has stemmed mostly from better economic data as building approvals and construction data pulled up some positive surprises.
Meanwhile, RBNZ's Wheeler's attempt to jawbone the kiwi is working to some extent. He commented that a lower NZD is needed to boost tradables inflation.
The ranges thus far have been relatively tight. Yen is lagging behind as market sentiment improves. The Nikkei closed higher on the day and US 10-year yields are slightly higher as well.
With regards to the AUD, personally I prefer to sell it against the USD as the pair rallies close to 0.8000. I did that before this and got stopped out twice, but the third trade was good enough as the pair headed towards 0.7800 in the middle of this month.
Looking at the chart, we're in a trend of higher highs over the last half-a-month but the 0.8000 psychological barrier is tempting to go short. Looking at CFTC positioning, the AUD is at its largest net long position since 2013. That is a bit telling as to how heavy or toppish the currency is feeling right now.
If you look at it again, the risk-reward for going short near the 0.8000 level outweighs the trade to go long. At most, I'll get stopped out just above this year's high of 0.8066. But if the trade goes favourably, we could see a downside move towards the 0.7900 and 0.7800 handles.
