AUD/USD session outlook: Benefitting from ‘reserve currency’ chatter

More reports overnight regarding the AUD reserve currency status, this time coming from the IMF who now formally recognise the AUD and CAD as reserve currencies alongside the existing 5 (USD, EUR, GBP, JPY and CHF). We don’t know exactly what this means in terms of ratio-adjustments by the various central banks but it certainly is bullish for Aussie sentiment. EUR/AUD has taken a fall after the Moody’s decision and the market will look to the Nikkei open and the Tokyo Fix for AUD/JPY leads. Short-term sentiment is bullish so buy dips to 1.0360/70 for another 100-pip grind higher. Medium term I still expect a top to form somewhere near 1.0500 but at some stage all this bullish news for the AUD will come back to bite us bears really hard.

RBA minutes will be released at 00:30 GMT and Governor Stevens is making a speech later today to the Economic Development of Australia annual dinner.

  1. I have a feeling that major central banks do not give a damn about IMF definitions of which currency is reserve. At least my cultural background would be mightily surprised if Russian central bank follow any lead from US based/controlled organization.

    But that news could still be a good excuse to trigger some stops on the upside.

  2. Sean, I am trying to reconcile your 1.05 target with my understanding and can not. I think if we breach 1.047 region in any meaningful way then we will get to 1.06 area, and if not than the local top should be below 1.045-1.047. So my main question at the moment: does current risk rally have legs. Because if it does I should chill till 1.06, if not than shorting here makes all the sense in the world.

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