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There seems little point in AUD bears trying to pick a top in the AUD/USD as long as a wide variety of Central Banks continue to buy. Once this buying dries up then we will probably see a decent retracement but the spot market could be at 1.06, 1.08 or even 1.10 before that happens. The market is also a bit thinner than usual in early August, when many big professional traders in the US and Europe take their family holidays. With the CB flows dominating, sticking with the short-term trend seems to be the path of least resistance.

There is an ubiquitous bearish bias underlying many trading recommendations relating to the AUD that is a hangover of the market in to ’80s and ’90s where most senior, experienced surviving traders cut their teeth. Rather than looking for what might happen when the buying dries up, we should be long the AUD looking for corrections to add to longs – a buying opportunity! The AUD is the least ugly contestant in a beauty pageant that will benefit from a world recovery should it ever arrive and will also benefit if more QE is wheeled out. IT IS A WIN WIN!!!

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