The AUD has powered higher overnight and this morning despite a further meltdown in metals and political turmoil as PM Gillard battles with rival Rudd over leadership of the governing Labor party.
The fight for the leadership of Australia’s Labor party has heated up overnight, as PM Gillard and the challenger Kevin Rudd were reportedly set to duke it out with a leadership ballot at 7 p.m . local time (0900 GMT). Not sure of the policy implications of this, and AUD crosses seem to be taking this in stride, to say the least given the ongoing meltdown in metals markets overnight, but let’s keep an eye on the political situation, which is easy to do at the Sydney Morning Herald website. The 0.9300/25 area is interesting in AUDUSD as a possible pivot zone for further consolidation. Nothing has changed big picture for the Aussie, with the outstanding short term question one of whether the speculative shorts have been over-aggressive.
Chart: AUDUSD
The rally will need to work well through the 0.9300/25 pivot zone (so far failed) and even up to 0.9500 to neutralize the weight of even the near term portion of the selling pressure, so bulls have a lot of heavy lifting to do to prove themselves. If the pair closes weakly in the near term, we may be set up for another test lower toward 0.9000.
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