Australian Dollar Continues to Recognize Resistance AboveThe US dollar will continue to be a safety currency that people will run to, and as the US Treasury market continues to attract a lot of inflows, it makes sense that the greenback will strengthen. At this point, it is highly likely that we will continue to see market participants fade short-term rallies, but keep in mind that this is a market that is also highly levered to China which is not going to be a helpful thing at this point in time. China is on the back foot when it comes to growth because quite frankly most of its customers are not buying.
While being tethered to China for the last three decades has been a particularly good thing with the Australian economy, the overreaching dependence on Chinese trade has shown itself in Australia as it enters its first recession in 30 years. It is highly likely that we have come close to seeing the top and the Aussie dollar during this cycle. The 0.65 level has offered a lot of resistance, and it is also an area where we had seen massive selling, to begin with. Ultimately, this is a market that is trying to determine its longer-term direction.
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