Australian Dollar is facing selling pressure due weakness of its key exporting commodities such iron ore and coal. Moreover Dollar side of the leg is likely to remain well-bid heading into US Federal Reserve's rate setting meeting mid-December. Despite so, rise is likely in the near term.
Reserve Bank of Australia (RBA) is likely to hold rates for the time being, which can extend beyond first quarter of 2016 and unless further weakness in demand from China. With that outlook on the rate front, Aussie is nice leg to hold for may short term traders to play out policy divergence heading into European Central Bank's (ECB) policy meeting next week.
Moreover, in spite of massive drop in prices of commodities, Australian economy seem to be doing quite well thanks to its stronger serves sector growth and inflation expectations seem to have well anchored for now.
Trade idea
- Buy Aussie against Dollar, since key short term resistance line broken at current price (0.721) and at dips.
- Target for the call is around 0.74 area.
- Stop loss for the trade is around 0.708 area.
