- The Australian dollar has fallen pretty significantly during the trading session in the early hours of Thursday but still remains near multi-month highs as we wait for Non-Farm Payroll in the US.
- The Australian dollar is highly levered to the Chinese manufacturing sector, and as the manufacturing numbers have recently gone back into positive territory, that does bode well for the Australian dollar and the Australian economy in general.
- If we can break above the highs from the Wednesday session, that frees the Aussie dollar to go much higher.
Non-Farm Payrolls and Central Bank Policy
Keep in mind that the non-farm payroll announcement is on Friday and that, of course, will have a major influence on what happens next with the US dollar, which is half of this equation. We do look a little stretched at the moment, but I don't think that really means anything other than we may consolidate a bit before making the next move. If we do turn around and break down below the 0.66 level, then I will treat it as a false breakout, but quite frankly, the Australian dollar has been a very choppy place to live as of late, and I don't think that changes anytime soon.
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Potential targets to the upside include the 0.68 level and the 0.6925 level. To the downside, if we break below the 0.66 level, there probably isn't a whole lot to keep us from trying to get back down to the 0.6450 level, which had been significant support over most of 2025. Anything below there would be disastrous, especially after stretching the way we have.
The Reserve Bank of Australia is expected to tighten monetary policy in the next couple of meetings, one of the few major central banks in the world that is doing so.
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