The Australian Dollar is soaring today as risk appetite returns to the market and Australian jobs data comes in much stronger than expected.
- The Australian and New Zealand Dollars are in focus right now as they power higher, with the AUD/USD and AUD/JPY reaching new 1-year highs, and the NZD/JPY cross also doing so. Trend traders might want to be long of the Australian Dollar. The reasons are:
- Existing bullish trend momentum
- President Trump poured cold water on the prospect of a US strike on Iran, seeming to say it would only happen if Iran moved to rebuild its nuclear program.
- President Trump took a forcible move on Greenland off the table and announced a framework which could see a deal between the US, Denmark, and NATO over Greenland's future. This includes the removal of threatened new tariffs.
- Australian unemployment data released earlier today showed a surprise fall from 4.3% to 4.1% when it was expected to rise to 4.4%.
- Stock markets were selling off and reaching 1-month lows (notably the S&P 500 Index) but then recovered strongly once President Trump made his risk-calming remarks.
- We are seeing a pause in the incredible bullish run in Gold, and Silver, with only Gold making a new record high yesterday near $4,900. Gold at $5,000 and Silver at $100 soon looks like a very realistic prospect. Trend traders will be interested to be long here. Analysts see these precious metals being driven higher by US President Trump aggressive rhetoric towards taking possession of Greenland, which is also causing tension with the EU via Denmark, as Greenland is an autonomous region of the Kingdom of Denmark. Also in the background is the prospect of a major war with Iran, with the US moving military assets towards the region and speculation over the fate of the Iranian regime following its unusually violent suppression of large-scale protests last week. It might be that Trump's calming remarks on these subjects could see the retracement or consolidation continue for the remainder of this week.
- In the Forex market I already mentioned the big gains made by the Aussie and Kiwi, but what is notable overall is that we may finally be seeing higher volatility return, with unusually large moves brewing in several Yen crosses. The Japanese Yen is weak over the long-term due to the Japanese debt crisis, with Japanese authorities wanting to hike rates but finding it hard due to the huge Japanese debt burden. Yesterday saw Japanese bond yields reach record highs, and the Yen is reaching new long-term lows against several currencies. Since today's Tokyo open, the Australian Dollar has been the biggest gainer, and the Japanese Yen the biggest loser, putting the AUD/JPY cross in focus. The USD/JPY currency pair is now trading well above the ¥158 handle. I have been long of this currency pair for a while, and trend traders will be too.
- There will be three major US data releases today. In order of importance:
- Core PCE Price Index (an inflation indicator) - expected to show an increase of 0.2%.
- Final GDP - 4.3% expected annualized.
- Unemployment Claims