The Australian dollar has rallied again during the trading session on Wednesday as we are trying to continue with the overall carry trade.
AUD/CHF
The Australian dollar has rallied again during the trading session on Wednesday as we are reaching that swing high again near the 0.5775 level.
Ultimately, this is a market that is continuing to play the interest rate differential as Australia actually has interest rates and, of course, Switzerland does not, at least it's basically 0%. The Swiss National Bank wishes to keep its interest rates low and as close to zero as possible and has been very vocal about it.
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So, with that, it's not a huge surprise to see that the Australian dollar has been taking advantage of that. You get paid to hang on to this trade at the end of every day, so short-term pullbacks look like buying opportunities to me.
Carry Trade and Support Levels
Full disclosure, I am not long of this AUD/CHF pair mainly because I am short of the Swiss franc in other pairs. So, I don't want to overexpose my shorts to the franc. But right now, this certainly looks bullish at the moment, and from a longer-term perspective as well.
The 0.5680 level is support with the 50-day EMA right there as well, so that also helps. And again, the carry trade is very much alive in other pairs, and as long as that's the case, this pair will continue to be bullish, all things being equal.
If we get sudden concern around the world again, we may get a bit of a pullback, but this has been a nice, pretty much steady and reliable grind higher since November of last year. And now we are on the verge of breaking yet another barrier in this pair, as it grinds higher again.
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